Main Page: Difference between revisions

From twiki
Jump to navigation Jump to search
(→‎Introduction: Definitions)
Line 21: Line 21:


== Blockchain Trilemma ==
== Blockchain Trilemma ==
Blockchain protocols have three common aspects: '''security''', '''decentralization''' and '''scalability''' -- the three terms that do not have precise definitions but intuitively understood by many <ref>https://sensoriumxr.com/articles/what-is-the-blockchain-trilemma</ref>. To date, the existing cryptographic tools have been proven effective for transaction security before the introduction of smart contracts. Decentralization is given by the nature of the protocols. In theory, there should be service downtimes unless the entire network is down if all nodes run the correct decentralized protocols. The scalability challenge eludes to deliverable performance and transaction finality which remains unclear.
Blockchain protocols have three common aspects: '''security''', '''decentralization''' and '''scalability''' -- the three terms that do not have precise definitions but intuitively understood by many <ref>https://sensoriumxr.com/articles/what-is-the-blockchain-trilemma</ref>. To date, the existing cryptographic tools have been proven effective for transaction security before the introduction of smart contracts. Decentralization is given by the nature of the protocols. In theory, there should be no service downtimes unless the entire network is down if all nodes run the correct decentralized protocols. The scalability challenge eludes to deliverable performance and transaction finality which remains unclear.




Revision as of 14:29, 15 June 2023

Welcome to Twiki -- A Toichain wiki

This is the unofficial Toichain wiki site. Content on this site is subject to frequent changes.

Introduction

The blockchain protocol was introduced via a paper entitled "Bitcoin: A peer-to-peer Electronic Cash System" [1] by a Satoshi Nakamoto in 2008. Although there were other peer-to-peer file-sharing projects before this time, such as Napster [2] and Bittorrent [3], and other electronic currency attempts, the Bitcoin project demonstrated the strongest staying power compared even to the currently running 23,000+ other blockchains. Unlike the new cryptocurrencies, the Bitcoin is often referred to as "digital gold" for its scarcity, there are only 21 million hard-coded Bitcoins in the protocol. Other protocols (and associated currencies) have different token supply amount and monetary policies.

The most attractive common blockchain features are the decentralized consensus-driven decision making process and step-by-step cryptographic proving system. In addition to cryptocurrencies, there are many applications that can benefit from such a secure store of value with transaction ledger design without any central authority.


Before trying to understand the Blockchain protocol and its variants, it is important to understand the differences between an algorithm and a protocol.


In general, an algorithm is a program that runs on a single computer solving a single problem. A protocol, however, is a program that runs on all computers in parallel solving a single problem. An algorithm must be transformed to run on all computers in parallel solving the same problem before it to be called a protocol. Therefore, protocol development is significantly more difficult than algorithms.

Consensus Protocols

There are two popular types of consensus protocols: Proof of Work (POW) [4] or Proof of Stake (POS) [5]. Others include Proof of Possession(POP)[6], Proof of History(POH)[7]. The design goal of the consensus protocol is to eliminate double-spending, unfairness and code tampering, since most protocols are Open Source. For cryptocurrency applications, hacking and code tampering are difficult to avoid if not impossible. To date, the Bitcoin network using POW has suffered criticism on escalating electricity consumption [8]. The POH network Solana suffered multiple single-point-failure incidents [9]. All consensus protocols are susceptible to 51% attacks [10]. However, since 2009, Bitcoin has been proven the strongest against the common hacks [11]. As the POW difficulty has increased over the years, the probability of 51% attack on the Bitcoin network becomes more difficult.

Cryptographic Proof

The Blockchain protocol relies on UTXO (unspent transaction output) model and lock-step cryptographic proofs to authenticate every transaction. Once spent, the UTXO is destroyed. Double-spending is theoretically impossible. Each proof step must be executed on a script engine running the same protocol on all nodes. The concurrently produced results are confirmed by the consensus protocol mentioned above before committed to the chain.

Blockchain Trilemma

Blockchain protocols have three common aspects: security, decentralization and scalability -- the three terms that do not have precise definitions but intuitively understood by many [12]. To date, the existing cryptographic tools have been proven effective for transaction security before the introduction of smart contracts. Decentralization is given by the nature of the protocols. In theory, there should be no service downtimes unless the entire network is down if all nodes run the correct decentralized protocols. The scalability challenge eludes to deliverable performance and transaction finality which remains unclear.


The trilemma was first introduced by Vitalik Buterin[13], one of the co-founders of Ethereum network. The problems are real. There seems no obvious solutions to accomplish all three goals using known methods. Therefore, all currently proposed solutions revolve around reducing "opportunity costs" focusing only on partial goals.


Treating the blockchain network as an infrastructure for transaction processing, one would find the trilemma was only an extension of the legacy infrastructure scaling performance and reliability dilemma, where "infrastructure reliability" also does not have a commonly accepted definition. Fortunately all these metrics, although important, are non-functional. Every proposed solution can be a "feasible" solution with varying "opportunity costs". There was also no obvious solutions to overcome the dilemma.

Definitions

It helps to define the challenging metrics more precisely before developing a solution.


Infrastructure Reliability: MTBF (mean time between failure) =

Infrastructure Performance: Number of Transactions/Second

Infrastructure Scalability:

Proof of Stake Protocols

There are many POS protocol designs.

- Statistic Multiplexed Computing - Statistic multiplexing method was first proposed in 1952 by von Neumann.

- Statistic Multiplexed Blockchain -

  1. ↑ https://bitcoin.org/bitcoin.pdf
  2. ↑ https://www.napster.com/us
  3. ↑ https://www.bittorrent.com/
  4. ↑ https://www.investopedia.com/terms/p/proof-work.asp#:~:text=Proof%20of%20work%20(PoW)%20is,a%20reward%20for%20work%20done.
  5. ↑ https://www.investopedia.com/terms/p/proof-stake-pos.asp
  6. ↑ https://csrc.nist.gov/glossary/term/proof_of_possession#:~:text=Definition(s)%3A,associated%20with%20the%20public%20key.
  7. ↑ https://www.infoworld.com/article/3666736/solana-blockchain-and-the-proof-of-history.html
  8. ↑ https://rmi.org/cryptocurrencys-energy-consumption-problem/#:~:text=Bitcoin%20alone%20is%20estimated%20to,fuel%20used%20by%20US%20railroads.
  9. ↑ https://cryptoslate.com/heres-why-the-recent-solana-outage-took-almost-a-day-to-resolve/#:~:text=25%20%E2%80%94%20the%20first%20interruption%20in,3%20minor%2C%20outages%20in%202022.
  10. ↑ https://originstamp.com/blog/has-there-ever-been-a-51-attack-on-bitcoin/#notable-51-attacks
  11. ↑ https://www.theguardian.com/technology/2014/mar/18/history-of-bitcoin-hacks-alternative-currency
  12. ↑ https://sensoriumxr.com/articles/what-is-the-blockchain-trilemma
  13. ↑ https://en.wikipedia.org/wiki/Vitalik_Buterin


Consult the User's Guide for information on using the wiki software.

Getting started

Retrieved from "https://smcdev1.ddns.net/twiki/index.php?title=Main_Page&oldid=15"