How to Solve Consensus Conflicts in Blockchain
The consensus mechanism is the essence of blockchain. Generally, the consensus mechanism works when the blockchain confirms transactions and makes the blocks. Bitcoin confirms the data when the data is recorded by 51% of the mining nodes participating in the current Bitcoin network. Bitcoin adopts a majority consensus. Many public blockchain have consensus mechnanisms. We’ll discuss the different types of consensus mechanism later in the essay.
The exit, modification of logic and policies implemented in blockchain, is one major conflict arising in the consensus. While Bitcoin developers have worked on improving the performance of Bitcoin for years, developers have yet to reach consensus. One primary example of a consensus conflict is the “hard fork” of Bitcoin, where the birth of two Bitcoins and the division of the Bitcoin community is taking place.
Ethereum underwent a similar problem. In the DAO incident, the Ethereum Foundation used hardforking as a last resort. However, Ethereum failed to establish a complete consensus, resulting in a split between “Ethereum” and “Ethereum Classic”. Hardforking proceeded without any consent rules on consensus in advance, so the community had to be split.
The Bitcoin and Ethereum hard forks shows the importance of a consensus mechanism in the blockchain ecosystem. If these kind of accidents continue to occur, the credibility of blockchain and the entire cryptocurrency ecosystem would decline.
The fundamental cause of consensus conflicts is not because Bitcoin or Ethereum are fundamentally flawed, but rather that blockchain is an emergent technology in it’s infancy. Bitcoin and Ethereum have succeeded in their own right, but they have not been able to predict how to operate after their success. Most existing blockchain projects, including Bitcoin/Ethereum, have no clear rules to define: how operational issues are agreed upon, new functionalities are added, and policy are reviewed.
Even if cryptocurrencies become more established, there will always be: errors in the code itself, incomplete initial design, and policies that need to be modified according to contemporary market requirements. If there are no consensus guidelines set beforehand, consensus conflicts will continue to occur. Therefore, we need to design a governance system for the blockchain itself. We need two kinds of consensus systems in blockchain: one is for data the other is for blockchain itself.
We need two kinds of consensus systems in blockchain: one is for data the other for blockchain itself.
Recently, new blockchains equipped with built in governance system tried to cope with this problem. Dash is the forerunner to implement governance system in their blockchain. Dash, who call themselves as the “First Self Governing, Self Funding Protocol”, proposed a decentralized management system based on the masternode voting mechanism in 2015. Dash has been steadily developed using this governance system. Recently the price of Dash surpassed over $100 (March 16th, 2017). A stable governance structure may be the reason for the increased value.
More and more recent cryptocurrencies have governance systems. Qtum, a Chinese cryptocurrency, has governance system named the “Judgement Committee”. Dfinity and Tezos also have governance systems. Needless to say BOScoin has a governance system as well.
In the above table, you can see two important features:
- Firstly, whether the governance system is bonded systematically with blockchain or not.
- Secondly, whether the new version or policy is applied automatically or manually.
These features are important as blockchain should be accurate and immutable. If the governance system stops working in the blockchain, there is a possibility that decisions made would not be applied.
Also if the update program/policy is not automatic, there would be discrepancy between the old and new version. If the software is dependent on humans for updates, there is a chance a biased human-operator may not implement the new update entirely.
If the new version contains crucial function/policies, the delay/denial of program updates may cause the split of blockchain and community (i.e hardforking) similar like the Ethereum. Dash has no auto-updating function so have a penalty policy to urge the masternode to maintain the latest program.
For example, suppose we’re going to change the transaction fee fixed from 0.01 coin to 0.001 coins. If the changed transaction fee is not applied in time, transactions cannot be confirmed because of the different fee of each node. So it’s important to have the governance system and auto updating function built in the blockchain.
Three cryptocurrencies Dfinity, Tezos and BOScoin are equipped with built in governance and auto updating system. Dfinity proposes BNS(Blockchain Nervous System), a kind of AI. The BNS has absolute control over the network such as freezing, unfreezing, and modifying otherwise independent software objects (smart contracts). The BNS can also configure the DFINITY client software run by users, for example to make the users upgrade to a new version of the network protocol. The Tezos Team state they implemented voting rights from the start with a built-in consensus mechanism. So upgrades are seamlessly integrated into the protocol, with complete transparency.
BOScoin Congress Network
BOScoin suggests a Congress Network which can handle the distribution of Commons Budget and the modification of codes/policies implemented in blockchain. The Congress is a governance body inside the BOScoin platform. Full node operators are given a vote to decide on how to distribute the Commons Budget and decide whether to modify the existing codes/policies.
For example, the transaction fee is currently fixed at 0.01BOS, which can be burdensome someday if the price of the BOScoin is raised or the BOScoin is used for micropayments. In this case, the BOSCoin Congress Network will vote on the agenda to change the transaction fee. If the agenda is approved, the new version will be updated automatically to the nodes and the new policy will be activated automatically at a predetermined block height.
If these system are implemented in blockchain, the blockchain can adjust and evolve itself according to the contemporary environment. It these systems work successfully, we can build a true DAO(Decentralized Autonomous Organization) self-governing community which is the dream of blockchain enthusiasts. I believe these kinds of democratic systems are the key to sustaining and growing the cryptocurrency ecosystem. Cryptocurrencies equipped with a governance structure will be the next wave of blockchain technology.