Distributed Consensus

Nakamoto consensus
• Nakamoto consensus, or PoW, was first introduced
with Bitcoin in 2009
How PoW works :
• PoW makes use of hash puzzles
• A node proposes a block has to find a nonce such that
H (nonce || previous hash || Tx || Tx|| . . . ||Tx) <
Threshold value.

• At a fundamental level, the PoW mechanism is

designed to mitigate Sybil attacks, which facilitates
consensus and the security of the network.
The process can be summarized as follows:
• New transactions are broadcast to all nodes on the network.
• Each node collects the transactions into a candidate block.
• Miners propose new blocks.
• Miners concatenate and hash with the header of the previous
block.
• The resultant hash is checked against the target value, that is, the
network difficulty
target value.
• If the resultant hash is less than the threshold value, then PoW is
solved, otherwise, the
nonce is incremented and the node tries again. This process
continues until a resultant
hash is found that is less than the threshold value.
 Variants of PoW
• CPU-bound PoW
• Memory-bound PoW
 Proof of Stake
• How PoS works
• PoS is an energy-efficient alternative to the PoW
algorithm
• The stake represents the number of coins (money)
in the consensus protocol staked by a blockchain
participant
• A PoS miner is called either a validator, minter, or
stakeholder.
• PoS mechanisms generally select a stakeholder
and grant appropriate rights to it based on their
staked assets.
 Types of PoS
• Chain-based PoS
• Committee-based PoS
• Delegated PoS
 Proof of Burn
• As an alternate expenditure to computing power, PoB,
in fact, destroys a certain number of Bitcoins to get
equivalent altcoins. This is commonly used when
starting up a new coin projects as a means to provide a
fair initial distribution. This can be considered an
alternative mining scheme where the value of the new
coins comes from the fact that, previously, a certain
number of coins have been destroyed.
• For example, if 10 bitcoin were destroyed, then
altcoins can have a value no greater than the Bitcoin
that was destroyed. This means that bitcoins are being
converted into altcoin by burning them.
 Difficulty Level
• 4. Check if the resulting hash is lower than the current
difficulty level (the target), then PoW is solved. As a result of
successful PoW, the discovered block is broadcasted to the
network and miners fetch the reward.
• 5. If the resultant hash is not less than the current difficulty
level (target), then repeat the process after incrementing
the nonce.
• Mining difficulty increases over time and bitcoins that could
once be mined by a single-CPU laptop computer now
require dedicated mining centers to solve the hash puzzle.
The current difficulty level can be queried through the
Bitcoin command-line interface using the following
command:
• This number represents the difficulty level of the
Bitcoin network. miners compete to find a solution to
a problem. This number, in fact, shows how difficult it
is to find a hash lower than the network difficulty
target. All successfully mined blocks must contain a
hash that is less than this target number.
• This number is updated every 2 weeks or 2,016 blocks
to ensure that on average, the 10-minute block
generation time is maintained. Bitcoin network
difficulty has increased in a roughly exponential
fashion. The following graph shows this difficulty level
over a period of one year:
 Sybil Attack
• A Sybil attack is a type of attack where a single adversary creates a large
number of nodes with fake identities on the network, which are used to
gain influence over the network.
• Sybil attacks can be carried out on a PBFT network, where a single entity
can control many identities to influence the voting and subsequently the
decision.
• This attack is also prevented in Bitcoin by using PoW, where miners are
required to consume a considerable amount of computing power to earn
rewards.
• If fake nodes try to add fake blocks to the Bitcoin blockchain, they will be
rejected because those blocks will not have the required amount of work,
that is, the PoW, associated with them.
• For an adversary to add a fake block, they will have to work at the same
difficulty level as the other honest miners and compete honestly;
• otherwise, their work (as long as they do not control more than 51% of the
network) will always be rejected by the network due to the insufficient
amount of work performed to create blocks.
 Sybil Attack
• Block users from the network
• Carry out a 51% attack

• Sybil Attack Prevention

• Direct validation
• Indirect validation
 Energy utilization and
alternate
• here are three steps in the process that requires energy :
1. Embodied energy - First, Bitcoin mining equipment
needs to be manufactured
2. Electricity
3. Cooling

• Is Bitcoin mining wasteful? But the Blockchain is not !

• Repurposing energy.-capture the heat generated
• from Bitcoin mining do something useful with it instead of
just heating up the atmosphere
• Turning electricity in cash
 Essential Puzzle Requirements
• variety of possible alternative puzzle designs
• It can be made arbitrarily more difficult by
tweaking a single parameter (the target ).
Checking solutions is trivial, requiring just a single
SHA-256 computation and a comparison, no
matter how difficult the puzzle was to solve.
• Progress-freeness. Another central requirement
is more subtle: the chance of winning a puzzle
solution in any unit of time should be roughly
proportional to the hash power used.
• ASIC-resistant puzzles
• Popular “Volunteer computing” projects

• Primecoin. The challenge in Primecoin is to find a Cunningham chain of

prime numbers.
• A Cunningham chain is a sequence of k prime numbers p 1 , p 2 , ... p k
such that p i = 2p i-1 + 1 for each number in the chain.
• That is, you take a prime number, double it and add one to get another
prime number, and continue until you get a composite number.
• The sequence 2, 5, 11, 23, 47 is a Cunningham chain of length 5. The
potential sixth number in the chain, 95, is not prime (95 = 5·19).
• Permacoin and proof-of-storage A different approach to
proof-of-useful work is proof-of-storage (also sometimes called
proof-of-retrievability ).
• Rather than requiring a solely computational puzzle, what if we could
design a puzzle that required storing a large amount of data to
compute?
• If this data were useful, then miners’ investment in mining hardware
would effectively be contributing to a widely distributed and replicated
archival storage system.