TAUcoin: Proof-of-Transaction

TAU Foundation
Published in
6 min readAug 6, 2018


Why Tau?

TAU creates a fair participation economy, where all users are involved in securing the network with their transaction history. With the innovation of Proof-Of-Transaction, users are incentivized to make more transactions and increase circulation by receiving the block reward. There is no advantage to having accumulated wealth and everyone shares in the growth of the TAU economy

We are all familiar with the concept of “the whale” in cryptocurrency. These individuals and groups hoard relatively large percentages of the circulating supply of a coin. The Active Unit (TAU), a brand new blockchain under development, has a solution to the whale problem through a concept called the coin velocity. Stated simply, it rewards participants for making transactions which keep the coins moving. Transaction volume rewards discourage hoarding of tokens and make it more profitable to be an active small fish than a sedentary whale.

What is Proof-Of-Transaction

TAU uses a brand new algorithm called Proof-of-Transaction (PoT) which in many ways is the opposite of PoS. Instead of encouraging a small number of participants to build up a large balance of tokens, PoT will reward large numbers of participants for small transactions made with their funds in the normal course of using the blockchain.

PoT removes the concept of vesting and changes the timeframe for transactions. How many TAU are held in a wallet is irrelevant, only the number of transactions that occur within the last year. This number of transactions includes any tokens sent or received; this total is called Harvesting Power. The more transactions that are made the more Harvesting Power a wallet holds.

Harvest clubs are formed by a club leader (A0,B0) and numerous club members

The Power of the Harvesting Club

PoT also introduces the concept of Harvest Clubs which is a way for groups to work together to gain block rewards. The TAU blockchain allows each wallet to delegate its total number of transactions to any another wallet increasing that wallet’s Harvest Power. In a Harvest Club, several member wallets will delegate their transaction numbers to a single leader, giving that wallet a greatly increased chance of rewards. When that leader wallet is successful in harvesting, the reward is then distributed to the member wallets.

PoT is important because each blockchain becomes its own economy. In many economies the total number of tokens held in small wallets outnumber those held in large wallets. However, those large wallets have greater influence over the smaller ones. By rewarding those that make transactions with more frequency rather than the ones who hold the most tokens the overall wealth the blockchain will naturally equalize. The movement will be from large holders with infrequent transactions to those that are using the blockchain for transfers on a frequent basis.

Secure, Fair, and better for the environment

  1. Secure — PoT also has the potential to overcome some of the security vulnerabilities of other consensus methods. A majority, or 51% attack, is made far more difficult by the one year window. This means in order to execute this sort of attack one wallet or Harvest Club would have to have more transactions than all the other wallets combined for an entire year. At first it might seem like this could to be achieved by creating a lot of meaningless transactions, but the amount of fees it would cost to do so would render the entire process unprofitable. This is an area of ongoing focus and it is the team’s goal to eliminate meaningless transactions completely with its “TAU defender” upgrade in the roadmap.
  2. Fair — PoT makes the TAU blockchain affordable to use and interact with. In PoW and PoS, mining participation is reserved for people with more money to invest in hardware, electricity, or a giant stack of coins in the form of a masternode. PoT has eliminated this barrier to entry by allowing anyone to be a Harvest Club leader, empowering community builders with the means to monetize their network size.
  3. Environmentally Friendly — PoS has made a big argument against PoW with the being environmentally friendlier. As of writing, the Bitcoin network spends more electricity per day than the country of Denmark. This number will only increase with adoption, and this is all to power a network with very few transactions on-chain. The cost of security in PoW is so high that we can’t ignore its contribution to the greenhouse effect. PoS has shown us that there is a viable way to pursue security without consuming electricity, and PoT takes it one step further by making everyone responsible for its impact.

A better user and vendor experience

At the end of the day, the winner amongst all of the crypto currency coins will be the one that provides the best User Experience in payments, while being ultra-secure behind the scenes. Wallets will be the first area of interaction with users, and there is a race to see which UX/UI will end up being the superior choice. That being said, it will be the fee side of the experience that will go through the most scrutiny, as we see transaction counts going up and competition for block space reaching its peak.

With PoW, we expect fees to start racing higher as the block reward continues to decrease. The profitability of a miner will being to dwindle as time passes and the competition for compu-intensive hash power increases. This will inevitably lead to fees that are not feasible for purchasing a coffee or some other daily routine. This is where PoT shines, because the economics of the entire ecosystem will not change later down the road. Harvest club leaders will remain as profitable as they have always been, and transaction fees will continue pushing down as they are shared with all active participants in the economy. Instead of the entire network bearing the cost, the cost of supporting the network is heaviest on those that rarely use it.

Vendors will also prefer this kind of approach. High volume businesses will see their fees decrease and will have incentive to contemplate new promotional strategies as a way to increase transactions (in an attempt to win the current block reward). This could also be extended to frequent business programs, where the users can choose to be part of the businesses’ harvest club. Low volume businesses with high amounts per transaction will also prefer this model, because they will pay a fee for prioritization, not a fee that is a percentage of their high cost transaction. Since TAU is “Transaction agnostic”, this allows a high cost/low volume business to focus on their core offering instead of trying to juggle different transaction fees with different payment providers. In both systems, the experience is improved because there is no favoritism to a specific economic set.

How can you join TAU

Want to learn more? The TAU whitepaper gets into a more technical discussion of how consensus is achieved, how randomness is determined, the special transaction process in reward sharing called “Club Wiring”, and a new concept at scaling called “Automatic Block Size”.

You can find the paper here

Today, TAU is actively sharing its project with the community. On taucoin.io, there is a Facebook faucet to create your first wallet and interact with the community through transactions and Harvest Power. For our launch, we are adding coins in every wallet, and the system is awarding additional coins for referrals. To better show the value of Harvesting Power at the community level, every referral is added to your Harvest Power once the mainnet is live. There is no other project that is actively rewarding community building now and in the future like this.

Because TAU is a community drive project, we are also extending whitepaper co-authorship within the community in an effort to figure out some of our most concerning challenges and to agree as a community what the next steps should be. If you have ever wanted to support a project that looks to be as egalitarian as possible, this is the one.

Join our telegram channel at https://t.me/taucoin

Thank you to Jody Powell for co-authoring this piece



TAU Foundation

Dean Pappas | Building Grape on Solana | Ex Marlin, Ethereum Classic, Zel, Taucoin | Ex GM at Zeta Global | Hearthstone and MTG