Smart Contracts a proper replacement for the miners and block producers

This article discusses the need for evolution in Blockchain technology, and the challenge of removing miners and block producers from this technology and also how replace them with the smart contracts.The authors of the article are Mr. Mehran Kazeminia and Ms. Somayyeh Gholami. The article is written in Persian and English versions.

Imagine you are a DApps developer or an EOS developer. For example, you are coding Solidity or C++ every day for smart contracts and you are fully aware of the smart contract’s features.

Meanwhile, this morning, your team have met a wise and prosperous customer. He has come to get advice, guidance and negotiate a new contract. He has explained a couple of hours about the specification of the application and requirements to your team to fully think about the subject and prepare the best offer for him. Perhaps even the name of this customer is Vitalik Or Daniel!

Your customer wants to manage the data of a database or a ledger. The database must be decentralized and all data must be encrypted and gradually be stored into blocks. Meanwhile, all the blocks will be chained, with the help of the hash, will be safe and secure. Your customer wants that he and all his clients be assured that there would be no mistake or error to make during recording and storing data into the blocks, and that the system works continuously and forever. Because this database is the main reference for important financial and business documents. They also want to be assured that there would be no way to tamper or manipulate data by the human or machines.

Smart Blockchain>> Without Block Producers & Miners

In this article, we’re going to look at the best suggestions for this customer. But the main question of the article is whether the tasks of the miners and block producers can be put into smart contracts? While developers propose smart contracts for the most complex projects and social interaction, such as types of voting, referendum, insurance types, and financial interaction in order to some extent eliminate human factors, costs, mistakes and reduce corruption, why for recording the transactions of these smart contracts, human factors in the form of the miner and the block producers should have a crucial role.


Ranking the priority of transactions, coercion or discretion?

We all know that your customer’s asked the best solution for storing and recording blocks of information into the Blockchain network. This question was asked by Satoshi Nakamoto in 2008! He’s replied and set up Bitcoin Blockchain with existing possibilities and in his own way. He involved the human as a miner in this network, by making financial incentives for them, and relieve himself and others of storing and recording encrypted data into block precisely and correctly. This process continued uninterruptedly until today, and Satoshi Nakamoto’s smart protocol has met the implementation phase, and regarding raising the value of bitcoin, operating costs of mining and even miners ‘s heavy consumption of energy did not disrupt it.

Vitalic Buterin also launched the Ethereum Blockchain in 2014. In this Blockchain, there was a possibility to store and deploy smart contracts. By launching of Ethereum Blockchain, smart contract developers could actually begin their work. The data encrypted in this network is not just the Ether or the ERC20 token transactions, but it may be just a LIKE reaction in the smart contract which has not the importance of a financial transaction. However, in Ethereum, even a LIKE cost a gas and is encrypted and stored exactly the same as an important financial transaction, and none of the transaction data has any ticket of classified priority and importance, they are encrypted and stored into a block, based on the transaction time.

The EOS Blockchain was designed to fixing some of Ethereum’s deficiencies and has made many innovations for ease of work for developers of smart contracts. Meanwhile, EOSBlock producers also use Delegated Proof of Stake. In this mechanism, the total operating costs of block producers and their energy consumption are significantly lower than the proof-of-work. The proof-of-work mechanism was used by Satoshi Nakamoto in the Bitcoin Blockchain and about its energy consumption said that today’s power consumption of miners is the same as the total electricity consumption in the whole country of New Zealand or the amount of electricity consumed in Hungary. This energy consumption is very high. Apart from the cost of electricity, it can also be considered for the environmental damage. If data and transactions of a smart contract were supposed to be recorded and stored on the EOS with the proof-of-work mechanism, the EOS block producer’s energy consumption would be much higher in the near future. Because today, serious efforts are being made on social networks worldwide like Facebook (but decentralized and on the Blockchain). We know just 52000 likes per second happens in Facebook and in Blockchain each LIKE is encrypted and recorded as a transaction. And do not forget that in EOS, transaction’s metadata does not have any ticket or label to categorize the importance or priority, and they are still coded and stored only by the time it occurs.

The EOS also has a special type of reward for block producers. Each year, five percent of the total existing EOS cryptocurrencies will be re-produced, mined and spent according to the following figure which included the reward is dedicated for block producers. Certainly, it will show its effect as inflation on the value of the EOS. It means that practically every year, five percent of the value of each EOS decreases. But, the EOS price may increase in the market much more than five percent, and apparently, the price decline does not seem to be noticeable. All these efforts made is for users like the users of a decentralized social media who works on the EOS Blockchain do not have to pay separate gas fees for each LIKE.

EOS Delegate Block Rewards

As you have noticed, there is no plan to thematic categorize the transactions in the Blockchain yet, and almost all important financial transaction and insignificant transaction, have been dealing equally. But let’s have the further discussion on this; however, in order to economize the operating-cost and energy consumption, also more appropriate access to data, your customer may ask you to use two different mechanisms at the same time to verify important and insignificant information.


Today’s Blockchain, Future’s Blockchain

Apart from the individuals and companies whom been mentioned, and others who have their own Blockchain, many companies, such as Telegram, are still working hard to set up their own custom-made Blockchain in the best way, and have a specific plan and mechanism for their miners and block producers. Of course, they may be primarily trying to increase their scalability, It means increasing the number of transactions per second or in other domains, they show initiative and creativity. But it’s important to choose the right mechanism for optimizing the operating costs and energy consumption of block producers. Because it is going to continue forever. Obviously, if for some reason the block producers stopped working, or if the proper storing and recording of data was stopped then the Blockchain was actually over.

At the moment, miners or block producers have a key role in the Blockchains. They Competitively and collaboratively prove the accuracy of the data in the next block of the chain and then add the block to the end of the chain. Certainly, currently, miners and block producers deserve to receive rewards and fees. But if it is possible to produce every second, an encrypted block containing transactional data and be assured about its validity and accuracy there’ll be no place for miners and block producers in future’s Blockchains.

If you are wondering how the smart contract can access data of every single transaction, you’d better read till the end. In fact, there is no wonder at all, because our smart contract is the main factor for all transactions, and without involving it, there will be no transaction between the two. For this reason, it could add easily the encrypted data of transaction in a form of a new block to the main chain in a split second. So In the next generation of Blockchains, smart contracts will be a good alternative for miners and block producers.

Please consider two points. First, Blockchains can also be centralized, for example; like Facebook, they can have their own servers. But this article is considering only decentralized ones. Second, many believe that, even over time, there is no worry about closing a Blockchain, since Blockchain investors to protect their interests, don’t let it come to a standstill, there are many examples to solve a variety of problems, Like Ethereum and other forks.

Please note that our suggestion is nearly eliminating the most complex and expensive item in Blockchain technology. Obviously, by eliminating this item, the Blockchain technology can be at the service to the community more than before.

Future Blockchain >> Smart Blockchain

Now, the 2008’s Satoshi Nakamoto Blockchain technology, developed for Bitcoin which worth couple thousand dollars, is used to record smart contracts, only with slight modification. In these chains, new tokens are produced and exchanged, the main cryptocurrencies of the network are exchanged, various types of intelligent contracts are recorded and deployed which have their own wallet, and … but all transactions are recorded into Blockchain based on the time of occurrence and stored decentralized forever, by block producers. Meanwhile, it consumes a lot of energy and time. Would the future of the Blockchain be the same way? And the miners and block producers will be involving? But we think the time has come for the greatest changes. In the article, we also announce the idea of a completely new decentralized Blockchain using smart contracts.


What is your offer to your customer?

However, you can also describe the mechanism of one of the most successful available Blockchains to your customer and offer it in some way, even promise to fix its minor defects with your own creativity. It’s not really hard to do, and there are some successful Blockchain projects as an example, and it seems easy to convince the customer and interlocutors. Another way is to forget the existing methods and mechanisms for a moment and look only at the ultimate goal, and if we realize better ways to reach the main goal, then we need to examine it.

It was almost a year ago that we realized miners and block producers could possibly replace by smart contracts. That’s why we’ve examined it more and more and we’ve got good results. Today, we are sure to say that the Blockchains of the future will not require miners and block producers. A main smart contract can accomplish Block producer’s tasks much cheaper, faster, and more accurately. These smart contracts can even separate important financial transactions from the rest of them. For example, instead of producing a block in split a second, they can produce simultaneously two individual blocks; odd and even block and immediately add to the main chain. In this way, odd blocks will be allocated for important financial transactions, and even blocks will be allocated to the rest of the transactions! And….. In the following, The Smart Contract, where is the Blocks Generator in the upcoming Blockchains, is called Blocks producer smart contract(BPSC).

Certainly, strong encryption, precision and … are the main features of the Blockchain, and new methods should not flaw these features. Instead, new methods should increase the benefits of this technology. Fortunately, in addition to cutting costs, using BPSC can create a lot of advantages for a Blockchain network that has not been possible so far. Also, all previous and old features of the Blockchain are preserved. But don’t forget, the proof of the efficiency of new and untapped methods is always overwhelming and plenty of problems may arise.

We hope that if you want to offer to use BPSC, your customer and the interlocutors, are familiar with the concepts and operating of smart contracts, and they know that after storing and deploying of a smart contract, no human factors Will not be able to affect its operation, and Blockchain based on BPSC will surely be more secure and impenetrable.

Block Producer Smart Contract >> BPSC

As previously mentioned, our proposed Blockchain, the smart contract which generates the blocks, or BPSC, is always one of the main factors in all transactions, and stores the last status of all transactions performed. meanwhile, There will be no other transaction without its involving in the network. For this reason, the process of block production and storing it directly without any intervention of human factors takes place in seconds. In the next section on this proposed method, we will explain the subject more with the simplified example.


How does the Block Producer Smart Contract(BPSC) work?

The BPSC smart contract can operate in a decentralized network in several ways. Just to convey the concept and outline its function, we give a simplified example to specify its advantages. In this way, we imagine our new Blockchain and the BPSC Smart Contract on an active network; Ethereum Network.

1- First , by using simple smart contract we create one million special types of ERC20 tokens together in the name of AKA TOKEN (Pseudonym), and we will keep all of them in the wallet of smart contract (AKA Wallet). The desired Blockchain is only for recording the transactions of these million Aka Tokens.

2- We consider ten wallets for Aka Token customers.

3- The important features of Aka Tokens and eleven wallets (Aka wallet plus ten customer wallets) are that only AKA tokens can send out of these eleven wallets to a specific address. Also, only Aka Tokens can be received from the same address. This unique address is the address of wallet of BPSM smart contract, which will generate blocks for our network.

4- The Main feature of the BPSC is to receive Aka Tokens only from these eleven wallets and can only send Aka Tokens to these eleven wallets.

5- We give BPSC several instructions, including sending immediately the same Aka Tokens which received from each of the eleven wallets to a wallet that is the final destination. The final destination or final receiver must always be ticketed by the sender. For any reasons, If BPSC can not send AKA tokens to the final destination, it should immediately return the AKA tokens to the sender. Meanwhile, the BPSC is required instantly to record a successful transaction list (getting tokens from the sender and send tokens to the receiver) and preserve it for making the new block.

6- We can set up BPSC to record transactions with over a thousand aka tokens in odd blocks and less than a thousand in even block. In this case, both blocks odd and even (for example, blocks number 115 and 116) are recorded consecutively at the same time; anyway, we have been able to separate the important transactions in this way. In addition to the ticket of final address, we can also define a second ticket for the sender to declare to BPSC which available block is needed to be recorded.

7- Now if Aka wallet sent 100,000 Aka Tokens to their customers via BPSC, the first transactions are stored in the BPSC, and from now on, customers can start exchanging Aka Tokens through the BPSC between themselves, and every moment BPSC Will record every single successful transaction.

8- The information collected by BPSC is the main information from the AKA Token transactions and there is no flaw in it. And BPSC, as the trustee and agent who all customers confident in it, can encrypt the information with the highest coding standards, and always with the registration new blocks in the main chain, will keep our Blockchain alive on a decentralized network.

9- It is even possible that several BPSCs work together in a decentralized network, and each one can be responsible for a specific Blockchain and a specific transaction. For example, a BPSC that has the task of recording one type of cryptocurrency transactions into a Blockchain, and another BPSC can be responsible for registering other cryptocurrency transactions in another Blockchain, and … In this case, the different cryptocurrencies in different independent Blockchain can be put together on a decentralized network. Until today, we only have seen multiple tokens in a network, they do not have an independent Blockchain, and they are not considered as a cryptocurrency.

10- This example illustrates the BPSC’s performance on a decentralized network, Ethereum. In fact, the Ethereum network receives Gas as a cost for each transaction and makes its own Blockchain. Now, in addition to the fact that BPSCs make their own Blockchain, the Ethereum main network is also active and records and stores all transactions in its own Blockchain. It means AKA Token transactions data is stored in two Blockchain. Of course, when we were sure of the BPSC’s performance, if the block producer don’t do their job or if they’re asked to end their works on Ethereum’s main network, then the BPSC’s Blockchain will no longer be flawed by this circumstances, and forever, Aka Token Transactions will be recorded and stored safely with no charges and problems.

Smart Blockchain>> Without Block Producers & Miners

The above example was used to illustrate the concept of the new Blockchain or, in short, the Smart Blockchain on an active decentralized network. So they can also join the new generation of Blockchain! But perhaps the main purpose is to set up a smart Blockchain on an entirely new network that has the ability that one or more BPSCs are responsible to produce blocks in the network forever. Certainly, launching a completely new smart blockchain, according to the above example, is possible. Even the creation of new networks practically is easier than to make changes to the available active Blockchains.


The last word

Miners and block producers use a specific protocol and robust processors to add blocks to the end of the chain into Blockchain. Generally, choosing consensus mechanisms, the rewards of block producers, etc. is one of the main characteristics of each decentralized network. In this article, is developed an idea for a new Blockchain, without the miners and block producers. The goal was to set an article in plain language, far away from the complex terms and complex concepts of decentralized networks. A simplified example for conveying the concept of the idea was presented. In brief, the changes in the later Blockchain after the Bitcoin’s one were examined and …. The aim was to bring the attention of readers to the need to change the technology of Blockchain is felt more than ever.

Meanwhile, we’ve come up with the idea for more than a year, and during this time, we’ve investigated and developed the subject, which is not mentioned in detail in the article. These efforts focused on the issue of getting the correct and flawless information from transactions at the time of transaction, and in this case there is no need at all to generate multiple alternatives from a block in order to choose validated block by using of different mechanism such as consensus mechanism and … which has high energy consumption and costs, and even create a fork.

There may be several ways to do this, but the most tangible one is the utilization of the concept of smart contract, which is briefly reflected in the article. The goal is precisely to get the flawless information from transactions, through approaching properly at the moment of all the transactions of a decentralized network, and encrypt data at the moment.

Also, the encoded data must be strictly protected on the same decentralized network until gathering the rest of the data and the moment of making the new block (which can be in a split second). As you see, the details of this process are completely in line with the concept of smart contracts. However, different scenarios can be defined for how smart contract deal with transactions. For example, the smart contract in our article was itself the sender and receiver of the token, but perhaps in a more sophisticated plan, the smart contract received the encrypted data of the transactions as a ticket from the original sender and receiver at the time of the transaction.

In the end, we hope to see positive changes in the Blockchain technology soon. In the meantime, if you find the idea and content interesting or if you basically think differently about it. Please send us your feedback.

November 12, 2018
Somayyeh Gholami
Mehran Kazeminia