PROF-OF-WORK: Forehouse of all algorithms in crypto industry. What is understood under the mathematical task

PROF-OF-WORK - This is one of the two most popular consensus algorithms on which cryptocurrency projects are built. IN this review We will tell you what proof-of-work, what and its features and carry out a comparative analysis with its main competitor - algorithm Proof-of-Stake.

What is PROOF-OF-WORK - from the sources to the essence

The first idea, which can be attributed to the term proof-of-work, appeared in the 1993 year in the work of Cyntia Dvia and Mona Nahor, which was called "Pricing Via Processing, Or, Combatting Junk Mail, Advances in Cryptology". The creators of this work put forward the idea that to gain access to shared resources, the user needs to implement certain complex computing, which will protect this resource from excessive use by the network participants. After 4 years, the HashCash project was launched, which was dedicated to the spam protection system. The system has been proposed to hashing part of the inversion through the use of email resources. To calculate a specific header required 252 calculations for each dispatch. If you need to send standard letters, obstacles were not created, but for the distribution of spam recalculation became very difficult at the task. And to verify the correctness of the calculated code, a large amount of time is required, since a special type of calculation of SHA-1 is applied at a previously prepared label.
In two years the term proof-of-work (POW) Already became officially used, and first was officially highlighted in the article by Jacobssone and Juels on the topic of protocols. After some time, the principle of work Proof-of-Work (POW) was used for building bitcoin network - The protocol allowed the consensus. Satoshi Dzamoto, developer Bitcoin, somewhat modified the initial option PROF-OF-WORKBy adding a mechanism for changing complexity that reduced or increased the desired number of zeros relative to the total capacity of the batcin network users. A full-fledged work system provided the SHA-256 function.

Definition PROF-OF-WORK An understandable language can be given as follows: the protocol guarantees the test ability of the node, or the nodes, for the implementation of the calculations by the miner, which is the node itself, which contributes new blocks to the network. At the same time, attempts to search for a history of the block header, which includes the previous block and the total value of the operations included in it, which determines the degree of complexity of the PROF-OF-WORK (POW) of the mining.

Distinctive features of PROOF-OF-WORK: how it all works

What is PROOF-OF-WORK (POW)? First, it is an effective algorithm that ensures the effective protection of the distributed system from hacker attacks, fraudulent actions and other unauthorized access.

Then how does PROOF-OF-WORK, You can enter into the following items:

1. Mandatory fulfillment of labor-intensive calculations;
2. Fast and easy test results.

Feature proof-of-work is that initially this technology It was calculated on computer power, and not on live users. The PROF-OF-Work method implies the use of significant computing resources, but ensures the fulfillment of the task in the deadline for simplified verification of the result obtained with minimal time costs.

PROOF-OF-WORK VS. PROOF-OF-STAKE: Comparison of algorithms

PROF-OF-WORK (POW), Translated from English proof of work, contributes to some degree of exposure to cryptocurrency dual spending. At the same time, Proof-OF-Work (POW) reduces this indicator as the volume of confirmed transactions in the network increases, which indicates the dependence on the number of computing power, which are at the Hacker. As warranty using PROOF-OF-WORK (POW) cryptocurrency, the reduction in double spending risks and users expect a specific number of operation confirmations, and also use risk reduction systems for rapid payments.
It is difficult to immediately understand that this is proof-of-work but simple words If the parallel between its main competitor POS should not be noted that these algorithms may be subject to similar attacks, but the result of this is different. The main danger is presented in the face of DOS, or refusal to maintain, and Sybill Attack, or Sibilla attacks. The first attack is focused on the interruption of the normal functioning of the system, which is achieved due to the overflow of the network nodes. For example, a hacker can flood a network with low cost operations in colossal quantity - recall the flood attack of the bitcoin network 2 years ago. When using Sibil's attack, the network operation is undermined by creating a grand number of incorrectly functioning nodes.
Algorithm exposure level PROF-OF-WORK And his competitor to these attacks has a dependence not only from the type of coordination, which is used within the network, but also on the detail network Protocol. At the same time today is not internal characteristicswhich could make one or another protocol less susceptible to attacks.

Another attack that can force users to shake for their cryptoacivals is selfish Mining., or selfish mining. For PROF-OF-WORK MININGE, With this attack there is a selective publication of blocks that makes users spend in vain their computing resources. The developers of the PROOF-OF-WORK (POW) is concerned, because, unlike its opponent, POS, which is not burdened by expensive resources, the situation is different here. However, none of the developers have not yet confirmed the effectiveness of this type of attack, and some believe that serious errors are assumed.
Definition PROF-OF-WORK (POW) Regarding sustainability of attacks, based on the total network computing power. But for PROF-OF-STAKE there is no equivalent of a "health state", since with a uniform distribution of currency in the network, the attack is based on its branching, and if users have a significant share there is a risk of censorship to transactions.

Pros and Cons proof-of-work (POW)

The main disadvantage of proof-of-work, because of which all porridge was brewed on the development of alternative algorithms, represented by colossal energy consumption during the work. The total costs of energy resources sometimes exceed the costs of industrial enterprises. However, in defense of this product, which, by the way, was the first of its kind and only for it deserves attention, it must be said that the algorithm provides qualitative protection resources and funds within the network. But it is from quality security Depends on the ability of the user to dispose of its means without concerns about the possible embezzlement.

PROF-OF-WORK and PROOF-OF-STAKE are consensus algorithms that are used to verify new network blocks, as well as adding transactions to them. Accordingly, the principle of operation of these systems directly concerns miners, which in 24/7 mode decrypt blocks. What is the difference between the two algorithms and which one is more profitable from the point of view of mining? Consider their principles of work, as well as make a comparative characteristic.

PROF-OF-WORK: Operation Principle

Pruf-from-Worc (proof-work), or Pow, as it is called abbreviated, with English translates as "proof of work". Actually in the title of the algorithm itself and the principle of its work is laid. It makes it possible to check the network that Mainer actually completed all the work on the calculation of the SHA-256 or SCRYPT function, the basis of the cryptocurrency.

The essence of POW is as follows:

• Mainer must solve a complex task that is only enough powerful computing machines.
• The result obtained during the solution should be easily checked.

If we talk about the Pruf-Code algorithm, specifically in the context of cryptocurrency, then it allows the nodes (find out what kind of nodes and how they work can be working in), check the operation of miners, as well as the accuracy of their calculations.

Such a mechanism stimulates the miners community to constantly upgrade its mining equipment, because the complexity of the network is constantly increasing, thus, the overall computing power in the Bitcoins network has already exceeded the indicators of the most modern supercomputer.

It is worth noting that the need to upgrade from the point of view of miners is not so much an advantage as the disadvantage. After all, the constant updating of the equipment requires large financial costs, which knocks out some players from the market.

PROOF-OF-STAKE: Principle Work

Until 2012, POW was the only algorithm involved in cryptocurrencies, but a competitor appeared on the horizon. They became the Algorithm of the Pruf-State Stake (Proof-of-Stake), or POS, that translated from English means "Vali Check". According to the structure of its work, it is fundamentally different from the "proof of the share." If in the first algorithm to increase the priority in the network, computing power was used, then the number of coins in the wallet play a major role in the case of POS.

That is, in order to enhance your chances to the first to decipher the block, you need to keep in your wallet as much as possible the coins of the cryptocurrency you are lantner. On the one hand, this approach is very profitable for miners, because it will no longer need to update its equipment, spend a large amount of electricity, and the attack on the network becomes almost impossible. But there are also their drawbacks. For example, if one of the users or the unitedgroup will be able to focus in his hands a large share of all coins, he will be able to manage the network.

PROF-OF-WORK and PROOF-OF-STAKE: Which side community?

Algorithms PROF-OF-WORK and PROOF-OF-STAKE (or PRUF-OF-WORK and PRUF-OF-STEEC) have long been soil for serious disputes between maneers. Some argue that the proof of work is more fair, others that the proof of the share is. There is no one unequivocal response.

In addition, a hybrid version of which combines both algorithms is quite often used. When the emission of the coin is carried out, the network works on the PROOF-OF-WORK, and when the issue is completed - on Proof-of-Stake. It is quite logical. After all, active participation at the stage of checking the work allows you to accumulate enough coins in order to "organically" wed up into a new stage of checking the share.

Despite the novelty and the Table Discussions of the POS system, most of the major cryptocurrencies are not ready to abandon the proof-of-work algorithm. Perhaps in the future it will happen, but now it is not observed. PROF-OF-WORK and PROOF-OF-STAKE remain competitors.

• Transfer

We continue to translate cool articles from Bytecoin.org. Today - "Alternatives for Proof of Work, Part 1: Proof of Stake" Ray Patterson (Ray Patterson).
Also read the translation " Brief history Evolution Proof-OF-Work in cryptocurrentes ": and.

Criticism Proof of Work

As we all remember, Proof of Work was born back in 1993 in the family of cryptographs; Parents referred to him a defender career from DOS and Spam. However, in 2008 he received a tempting offer from a certain anonymous with Japan accent: to become the basis for a distributed time stamp server. The scheme seemed simple: Networks of the network "Value" for their version of the transaction history, investing their facilities in the calculation of "rare" haze. The version that has received most votes is accepted by other nodes as a reference.

An important point was to ensure the large total network power: to protect against a potential attacker with its potential 51% of resources. However, the initial POW concept implied small tasks to execute the client to access the server resources. Within such a DOS protection model, even small client power will not interfere with the efficient use of the resource, and the big simply not required. Therefore, the motivation for miners was implemented simply: "in nature", bitcoins, i.e. in fact money.

And it all changed. In the world, the cryptocurrencies of POW turned into a monster devouring electricity in the race for the profitability of mining. Serious claims appeared approximately in 2012, when the total capacity of the Bitcoin network "overtook" in terms of performance is the most powerful supercomputer in the world. "Useless waste of energy!" - Discaled from all sides of the cries. Robust protests of defenders about the protection against attack 51% and energy-appetites of banking terminals were ignored, the benefit on the horizon was already the first alternative - Proof of Stake.

Proof of Stake

As an idea, it was born in one of the posts on Bitcointalk back in 2011. The first implementation saw the light in a year, in 2012, in cryptocurrency ppcoin (now called peercoin). In the future, such protocols appeared in other projects, a little later.

POS has various incarnations, but one common idea: a limited resource that needs to vote cannot be found not only in outdoor world (burned iron and electricity), but inside the system itself - the digital coins themselves. Holders of coins - Holders (Stakeholders) - do not spend them during voting, of course, but blocked for a while, and the limitations are achieved. Obviously, at least a computer and should be included for mining, it is not necessary for any serious computing.

How PPcoin works

So, the resource of the Mainer is its coins (unprofitable, of course). Or rather - unproved transaction outputs, each of which corresponds to some number of coins. Mining happens as follows:

1. Choose your way out, which was received at least 30 days ago.
2. We form the Kernel structure, where includes: deterministic data from exit (the block time in which it appears, its number inside the block, etc.), the current time, etc. NSTAKEMODIFIER (periodically recalculated block of pseudo-random bits).
3. Hash Kernel and compare the obtained value with the current goal, which depends on the current complexity of the network (above the complexity - less purpose), "age" of the exit (more age - more goal) and its amount (more coins - more goal).
4. If the hash turned out to be more goal - we return to paragraph 1, we take the next way out.
5. If the output was "successful" - we spend it in the coinbase transaction (sending yourself), add a reward for the block and commission from the enabled transactions and sign the entire block key, which was associated with the spent output.
6. Voila, block is ready. We start searching for the following.

Remarks:

• Checking the unit deterministic: The current time is taken from the block header, the output data from the blockchain, NSTAKEMODIFIER is also uniquely calculated for each block.
• The output must be "old" so that the attacker could not, send money between its wallets, get a "good" output, which immediately allows you to find a block.
• nstakeModifier is calculated based on the last blocks, and therefore unpredictable. Thanks to this, mining is even more unpredictable (and more resistant to possible attacks).
• The current timestamp in claim 2 may vary widely: plus a minus hour. Therefore, in fact, for each exit, you can check 7200 hashes, and not one.
• "Aging" target multiplier is limited from above 90 days. Otherwise, the attacker could, having only several very old coins, with a high probability to generate several blocks in a row.

In fact, the POS-mining process is the same lottery as in POW. However, the ticket does not need to "pay" with its capacities: the bust of the options occurs on a very limited space of its own outputs and does not depend on the CPU speed. Only your total coin and the current complex complexity are affected on your chances.

Thanks to this, we get the following profit:

1. We save energy. You can't argue here, although you can use "Useful work" for POW (see Primecoin) or ASIC-Resistant Functions (Cuckoo Cycle, Cryptonigh, Ethash etc.), which would limit the area of \u200b\u200bmining personal PC.
2. The lack of an infinite "arms race": now the overall hash is limited not to the rule of Moore and the laws of thermodynamics, but a total number of coins in the wallets of participants. On the other hand, in such a model it is difficult to understand, is there a large percentage of resources in honest hands?
3. Attack is becoming more expensive. If I want to buy 51% coins, the market will react to the rapid increase in the price. In addition, what makes it meaning to make an attack on the network, if all of my resources are invested in the virtual coins of this network?

It seems that everything is wonderful: we actually replaced the physical work with a certain virtual resource. But does it not lift the problem?

Criticism Proof of Stake

Answer the question: how much money spent? If anyone contact you and offer you to buy private keys with which you have long spent all the money - at what price do you agree? Since these keys are no longer worth it and do not need anyone - I assume that any offer will arrange you: it's the same money from nothing!

And now imagine that for some point x in the past it turns out that 50% (or more) of all coins lay on the keys purchased by the attacker now. For simplicity, we can assume that the moment X is the time immediately after creating the second block, and someone bought the keys of both blocks, i.e. Return he in the past - would have 100% of the entire money supply.

In fact, it is not necessary to physically return to the past. From now on, it can "rewrite the whole story of the blockchain," carrying out mining with these old coins! And getting a reward for each new block, and increasing your capital. He is not necessarily even to create transactions (although he may simply translate money to himself).

At some point, its alternative chain will catch up with the real and even overmine by the number of blocks. The entire network switches to it, because there are no syntax differences between them. But the main difference will be that in one of them more than half of the coins will still belong to the attacker. So, selling "dead souls", you can easily lose the "alive".

With such a specific attack, of course, you can fight. Peercoin, for example, uses the practice of regular checkpoints: blocks signed by the developer key, "deeper" forbidden to restore the blockchain. But this is a private solution that does not save from more common problem - Nothing on Stake.

The problem is that mining - vote - nothing costs, does not require any physical costs. If, for example, at some point, two blocks will appear on the same height (fork chain), you can simultaneously be the Major version of the chain. With POW, it is impossible in principle for obvious reasons: each tested hash chain A is the untested hash chain B. POS and allows you to exist in all the "parallel worlds" at once, and at any height (i.e., including past).

In POS, you are much easier to carry out a Double-Spend attack. Always always Maja Two versions of the next block: one with a transaction that transactions that translated your money to the seller (which is not waiting for N confirmations), and the other - with you by translating them to you. If it happens so that you will find both units, then the first you send the seller (and get your goods), and the second is the rest. With a high probability, the second version of the chain will continue, and the money will return to you.

The problem of POS is that you have a few alternative branches. You can simply do it for free, with non-zero chances for success, which means - increase the care of the income. POW does not allow you to have such pants, and therefore you can only in one branch (in what is your choice). As a result - consensus is achieved in the POW model sooner or later, and in pure POS, it is impossible to ban convergence.

If you are interested in this problem, then you can find details

What is PROOF-OF-WORK and PROOF-OF-STAKE?

PROF-OF-WORK and PROOF-OF-STAKE - the two most famous consensus algorithm in cryptocurrencies. They offer differing mechanisms for the proof of the work done in their structure.

What is the essence of PROOF-OF-WORK?

PROF-OF-WORK (POW - Literally: Proof of work) - Algorithm for the protection of distributed systems from abuses (DOS-attacks, spam mailings, etc.), the essence of which is reduced to two main points:

1. the need to perform a certain complex and long-term task;
2. features quickly and easily check the result.

Pow-tasks are not originally intended for a person, their solution to the computer is always achievable in the end time, but requires large computing capacity. At the same time, the verification of the obtained solution requires much less resources and time.

Who came up with the term PROOF-OF-WORK?

For the first time, the concept of PROF-OF- Work was described in 1993 in the work of "Pricing Via Processing, Or, Combatting Junk Mail, Advances In Cryptology" (Cynthia Cynthia and Mona Naorn). And although the term itself in the article has not yet been used, the authors offered the following idea:

"To get access to general resourceThe user must calculate some function: quite complicated, but sat; So you can protect the resource from abuse. "

In 1997, he launched the HashCash project dedicated to the same spam protection. The task was formulated as follows: "Find such a value of X that the hash SHA (X) would contain N senior zero bits."

The system offered the hashing of partial inversion when sending e-mail. To calculate the corresponding header requires about 2 52 hash calculations that need to be recalculated for each shipment. And if additional calculations of the obstacles are not created for sending several ordinary letters, then sending the spam to the need for constant recalculation makes it very resource-intensive. In this case, the validation of the calculated code is carried out very quickly: a single calculation of SHA-1 is used with a predetermined label.

In 1999, the term PROOF-OF-WORK itself appears - it was used in the article "Proofs of Work and Bread Pudding Protocols" (Authors - Marcus Jacobsson and Ari Jusee) in Communications and Multimedia Security magazine.

What does PROOF-OF-WORK ratio have to cryptocompute?

In the Bitcoin network, the POW mechanism was used as a means of achieving consensus (a single opinion about which version of the blockchalter is true). At the same time, as a basis, the creator of the first cryptocurrency of Satoshu Dzamoto took the idea of \u200b\u200bthe HashCash mentioned above, adding the mechanism of changing complexity to it - a decrease or increase of N (required number of zeros), depending on the total power of the network participants. The calculated function was SHA-256.

If we speak with simple words, the POW mechanism provides the ability of the network node (nodes) to verify that Mainer (as a node, adding a new block in the blockchain) actually performed calculations. This process Includes an attempt to find a key header (part of the blockchain, which contains a link to the previous block and the summable transaction value, included in it), which will be in due value to match the current level of complexity.

Is the complexity of the computing "complicated"?

These calculations can be carried out only in interactive mode, and the complexity is set at a level that it really turns out to be complex. At the same time, checking the results of calculations remains simple. The nodes can always make sure that the Mainer found a correct value, however, since the process of finding the block is very labor and occasionally, it is impossible to predict exactly what Mainer will solve the task and find a block.

In order for the system to recognize the block of valid, it is necessary that its hash value is less compared to the current goal. Thus, each block shows that a certain work was done to find it.

Each block contains a hash of the previous block, forming a chain. You cannot change the block - it is possible to only create a block at the same height that will contain a hash of the previous block. To carry out such a process, it is necessary to make work on finding all previous blocks. The high complexity of this process protects the blockchain from unauthorized access and double spending.

How did PROOF-OF-WORK affect the mining?

Bitcoin's PROOF-OF-WORK gave rise to an entire minening industry and became an impulse to develop specialized equipment, since computational resources consumed on the hashing of blocks are huge and much exceed the capacity of the largest supercomputers.

At the same time, it was not without the notorious " back side Medals ": Fast enough power turned into a monster devouring electricity in the race for the profitability of mining. In 2012, the total capacity of the Bitcoin network has already exceeded the performance of the most powerful supercomputer in the world, and the first alternative appeared on the horizon - proof-of-stake.

What is PROOF-OF-STAKE?

Alternative consensus mechanism, first implemented in 2012 in cryptocurrency PPCOIN (now known called Peercoin). The idea is to use the "share" (stake) as a resource that determines which node is the right to produce the next block.

In the PROF-OF-STAKE approach, the nodes also try to hashing data in search of the result less than a certain value, but the complexity in this case is distributed proportional and in accordance with the balance of this node. In other words, in accordance with the number of coins (tokens) on the user's account.

Thus, more chances to generate the next block has a node with a large balance. The scheme looks quite attractive primarily due to the small requirements for computing resources, and also because it is not worth the question of "wasted" capacities.

What are the arguments for and against Proof-of-Stake?

As a rule, the following arguments are given in favor of using POS:

• Attack requires significant funds, which makes it inappropriate from a financial point of view.
• At the same time, if there is a large number of tokens at the disposal of the attacking, he will affect the attack, since it will violate the stability of cryptocurrency.

Causes arguments:

• The POS provides additional motivation to the accumulation of funds in some hands, which can negatively affect the decentralization of the network.
• If a small group is formed, which will collect quite large funds, it will be able to impose their rules for the work of the network to the rest of the participants.

Additionally, it is possible to mark the problem of the NOTIN-AT-STAKE (empty STEK), which makes POS systems by nature unstable in the eyes of many cryptocurrency enthusiasts. The attacker can try to make the fork blockchain, i.e. create a longer alternative chain by spending "non-existent" resources. Moreover, other miners can support it, as they also do not spend "genuine" resources. By means of the forction, the attacker may reject certain transactions and exercise the attack "Double spending".

Whose side of the scales?

Disputes between POW and POS supporters last long time, but the nature of these disputes is more theoretical. Practice shows that the role of the developer in safety issues is still very high.

At the same time, many consider the most secure solution to the hybrid version of POS and POW systems. This approach is already actively practiced - many cryptocurrency has a POW stage when the currency is produced through classical mining, and the POS stage coming after the emission is completed.

However, despite the fact that the POS systems will always be easier for implementation and in general as reliable in terms of security, most serious cryptocurrency, most likely, will not give up POW.

At one time, the Forklog adapted translation of Whitepaper written by the Bitfury Group, which compares the operation of the principles of protection of POW- and POS systems.

What other evidence mechanisms are in cryptocurrency?

Their list may be quite large, so we will list a few most famous:

• Proof of Activity (proof of activity) - standard hybrid scheme combining POW and POS;
• DELEGATED PROOF OF STAKE (delegated confirmation of a share) is a general term describing the evolution of basic consensus protocols based on the confirmation of the share. DPOS is used in, and;
• Proof of Burn (burning proof) - "burning" occurs by sending coins to such an address from which it is guaranteed to spend them. Getting rid of thus from their coins, the user receives the right to lifetime mining, which is also arranged as a lottery among all owners of the coins;
• Proof of Capacity (resource proof) is the implementation of the popular idea of \u200b\u200b"Megabytes as resources". It is necessary to allocate a significant amount of disk space to engage in mining;
• Proof of Storage - similar to the previous concept, at which the selected place is used by all participants as a joint cloud storage.

Most of the modern cryptocurrencies, including Bitcoin and Ethereum, uses the Proof-OF-Work algorithm to build a block chain. Briefly, the POW process can be described as follows: Mainers spend computing power and electricity, selecting the right hash-sum that means the actual signature of the transaction block. Calculate the usual hash for the block is not difficult, but to protect the chain of blocks from attack attackers, the kind of hash-sum is deliberately complicated, for example, its first four digits are obliged to be zeros. In this case, if the attacker wants to change transactions within the blockchain, it will be needed to spend time to calculate the correct hash sum. But since, in the blockchain, each subsequent block is associated with the previous one, to recalculate the hashi will have throughout the chain. This makes a blockchain resistant to hacking, and the miners pays remuneration for cryptographic calculations. The process is described in more detail in this video:

However, some cryptocurrencies (Peercoin, Novacoin, Bitshares, etc.) decided to abandon the concept of Proof-OF-Work.

The obvious advantage of proof-of-stake in front of the PROOF-OF-WORK is that its implementation does not require a giant electricity consumption from miners, which makes it much more efficient. But this is not the only dignity. It also allows you to implement a new generation management system, for example, by providing network participants with the opportunity to participate in the choice between hard-and software.

(Charles Hoskinson Edition Bitcoin Magazine)

The ethereum transition on PROOF-OF-STAKE was announced allegedly at the end of 2017. Ethereum plans have always been a transition to the POS model using a not yet completed Casper protocol. However, the decision is not final: in the discussion on Reddit, the Vitalik Biderin has determined the probability of the implementation of Casper in 2017 as more than 50%, but less than 80%. But why did the Etheric developers hesitate? If POW has proven its effectiveness from attacks on the example of Bitcoin, then C POS reveals many security problems.

And finally, Etherium Classic does not plan to go in the near future to POS:

The ETC community for the most part reached the consent that we should not hurry with the transition to the unverified and potentially dangerous POS. Our team of developers is now working on the "drinking" of the notorious "difficulty bomb", which should force to the transition to the POS by means of hard fort. At a minimum, we must wait and see (for a long period) How such a transition to ETH will occur, leaving them a dubious honor testing of a unverified concept on a living system with a capitalization under a billion dollars. It will give us more time and data to make a decision regarding the long-term ETC consensus mechanism: whether to us to POW, go to POS, or a hybrid POW / POS scheme that is more theoretically justified than pure POS.