Have
you heard of... The blockchain? Cryptocurrencies? Digital currency
Exchanges? Miners? Tokens? Smart contracts? ICOs? STOs? Blockchain
applications? Jobs in the blockchain industry?
None
of the above would exist without a crypto-network
infrastructure that securely exchanges transactions,
guarantees the reliability of the network and the integrity of the
replicated data (the blockchain). This technology, introduced by
Bitcoin, is now ten years old.
The
original goal of Bitcoin was to create a secure method of trading
among peers using a currency that could not be controlled by any
person, company or institution. It was then discovered that the
blockchain concept it employed was extremely useful for many
applications.
However,
current crypto-networks providing a blockchain infrastructure,
including Bitcoin itself, have morphed into networks that rely on
special intermediate nodes.
In addition, the established crypto-networks are limited, costly and cannot support the many applications we envision for the blockchain.
In addition, the established crypto-networks are limited, costly and cannot support the many applications we envision for the blockchain.
The
fixes proposed for these problems are complex and are often applied
to the side or on top of existing networks none of which is fully
distributed.
Other
solutions also exist, that have abandoned the blockchain concept
altogether.
In
the last few years the idea of a scalable network of peers securely
guaranteeing replicated data has been a challenge for the research
community. Decades of research on Byzantine Fault Tolerant solutions
(BFT) has produced only one practical (PBFT) solution, Bitcoin. But
Bitcoin delivered on its promise only until its own success
substantially changed its nature.
The
good news is that research did not stop and new approaches for
building the blockchain infrastructure are on the horizon.
The
meaning of the words permission and consensus
To
fulfill its original goal the blockchain infrastructure had to be
free from a central authority, or unpermissioned
(permission-less). Transactions had to occur between peers, without
intermediate participants, in a fully-distributed
network. Every node had the same responsibility for securing the
network from attacks, for the verification of transactions, and had a
similar probability of getting rewards.
Bitcoin
started out as a distributed network - each and every node, usually
PCs with fairly equivalent processing power, was able to securely
exchange and validate transactions and mine rewards.
However,
the Bitcoin "consensus" process (called Proof of Work) was
leader-based. One node, the node that won a random computing
challenge, acquired the right to dictate the composition of the block
to all other nodes in the network. The addition of a block to the
blockchain came with the opportunity for that winner node to create a
substantial reward for itself.
The
word "consensus" was not used by Bitcoin to reflect a
general or unanimous agreement, but to express almost the opposite:
the requirement for every node to adopt the winner's block
composition. By broadcasting the winner's block to every other node
Bitcoin guarantees that the blockchain replica is identical on every
node.
Tendency
towards centralization
In
this scenario, every node has
an interest
in becoming
the winner and cash in
their
reward.
Many entrepreneurs saw the opportunity and acquired powerful specialized processors in order to increase their probability of winning the rewards. New manufacturers specialized in the production of fast hashing processors emerged and a new mining industry was born.
Many entrepreneurs saw the opportunity and acquired powerful specialized processors in order to increase their probability of winning the rewards. New manufacturers specialized in the production of fast hashing processors emerged and a new mining industry was born.
It
became a question of return on investment: how much
it would
cost to acquire and run many specialized
processors versus the average
amount that could be earned
in rewards.
This
led to mining
farms and mining pools, with large
conglomerates of specialized
processors becoming
associated with
one Bitcoin node. Some
nodes became more and more powerful. Their influence on the network
was only limited by their self-restraint.
If one mining farm acquired
more than half of the network's
computing power, user's
trust in the network would evaporate.
As
a result of these
developments,
the infrastructure, for the Bitcoin
crypto-network, soon morphed
from fully distributed (all nodes are
miners)
to de-centralized (a much smaller
number of
nodes are miners).
Other
crypto-networks
It
was soon recognized that Bitcoin had a
high cost, several problems and
limitations.
Many
developers cloned
the Bitcoin open source code,
made
improvements, and then released
new crypto-networks.
The
number of crypto-networks
has proliferated
to several thousands.
Permissioned
networks and De-centralized Ledger Technologies
After
the success of blockchain technology, spearheaded by Bitcoin, some
financial sector companies realized that the blockchain concept could
be integrated with their various proprietary approaches to share
financial data. This technology is sometimes called Distributed Ledger
Technology (DLT), but more correctly it is called Decentralized
Ledger Technology.
Financial
institutions, by nature, want to own assets (traditionally financial
assets). By using DLT technology they may also profit by controlling
and selling access to other types of assets. These networks are
permissioned.
In
permissioned crypto-networks, a set of special
nodes act as
intermediate nodes,
verifying and adding transactions to their
replica of the ledger. These
nodes maintain the consistency of their
replica of the ledger and must be trusted by all other nodes.
The requirement
to trust an intermediate node, a
verifier, is the key distinction between a permissioned
network and a fully distributed, unpermissioned
network, where there are no
privileged nodes with the responsibility of approving transactions.
We will
come back to trust in the next section.
De-centralized
network designs
have the
advantage of higher throughput, since
large resource investments can be made on a
limited number
of special nodes.
The rest of the network nodes
do not need to address and exchange data directly
with each other, but only
exchange data
through
specific, trusted nodes.
Needless
to say, the
original cryptocurrency users did not think much of the massive
effort by
software industry
leaders in permissioned
networks.
A
real distinction?
As
we mentioned, Bitcoin started as a
distributed network but,
because of the appeal of the reward
created by its leader-based consensus
mechanism, it now relies on a set of
miner nodes.
Because
of the high
cost in electrical power required to run mining processors,
many successful Bitcoin clones have
adopted, or are migrating
to, less costly
leader-based consensus mechanisms, such as Proof of Stake, Proof of
Authority, Proof of Capacity, etc.
However,
while the Proof
of Work mechanism was
originally designed
to achieve equal probability for every
node to gain the reward,
leader-based mechanisms today
are not as democratic.
In
essence, Proof of "something" mechanisms
require that some
uncommon property be proven before the
node acquires the right to participate in rewards.
In
Bitcoin, that "something" was the ability to perform
computational tasks, to
prove in
real time that the node ran on
a real computer and not on a
simulated or virtual one.
For
networks adopting "Proof of Stake",
that "something" means
proving the
ownership of a large amount of the
network's currency.
In
all cases, only a limited number of nodes are accredited
and trusted as verifiers.
In
unpermissioned networks, the
tendency towards centralization causes a
continuous drop in the number of
verifier nodes.
When
the number of verifier nodes
becomes small,
it would be much easier for an attacker to take over the network,
thus verifier nodes must be
trustworthy.
The distinction between unpermissioned,
leader-based consensus networks and
permissioned
networks is therefore fading.
No
distributed consensus mechanism has been implemented
yet that resists the trend towards centralization.
This
is not just an academic or philosophical discussion. Ethereum,
after its
success as an unpermissioned network
used for
the development of tokens,
is moving towards a Proof of Stake
design,
with a limited number of verifier nodes. Several
newer
clones of Ethereum, such as Tezos, EOS and TELOS describe themselves
euphemistically as
"substantially decentralized".
Other
networks, such as Ripple and Stellar,
are popular because of their
speed, even if they
are the product of
permissioned
designs.
Has
the original goal of Bitcoin has been abandoned?
Do all
current crypto-networks need
intermediate
nodes to
verify end-user transactions
and add blocks to the blockchain?
Furthermore,
is there a solution to cost and limitations of the original networks?
Those networks that claim to have fixed such problems are creating
complex solutions at higher layers.
Continuing
research
As
I mentioned, blockchain research is continuing. The goal is still the
same: to provide people with the ability to trade and exchange data
directly without having to trust an intermediate entity.
When
exploring the idea of
fully distributed crypto-networks
without intermediate
nodes the
following questions arise:
-
Is it possible to eliminate miners/verifiers, eliminate their rewards and fees, and still ensure the integrity of transactions?
-
How can such a network protect itself from majority, Sybil and DoS attacks?
-
Is it possible to eliminate the network tendency towards centralization?
-
Is it possible to completely abandon the idea of leader-based protocols and achieve majority agreement without ever broadcasting blocks?
-
Could such a leaderless network securely guarantee a correctly replicated blockchain on every node?
-
Could a mobile phone act as a node of this type of crypto-network?
-
Can the blockchain be stored on a mobile or wearable device?
-
Can a mobile device participating as a network node keep up with the traffic generated by all the transactions in the network?
-
Can user wallets be secured when the nodes where wallets are stored are all verifiers?
Stochastic,
fully distributed networks
The
vision of a
fully distributed crypto-network
with no special intermediate
nodes and
not owned by any entity is much
closer than you may think.
All of the above questions happen to
have a positive answer when the
crypto-network is based on stochastic logical environs.
The
research work
on distributed stochastic
crypto-networks
started in 2016.
A new truly
distributed consensus agreement
has been developed,
which is called the Majority Agreement
Recursive Protocol based on Logical Environs
(MARPLE).
Each
node can find agreement with a random set of physically remote but
logically connected
nodes (environs). These are dynamically and continuously
re-configuring. The
nodes in these environs
recursively and
synchronously share their current
block outline
by using very short hash packets. When
disagreements occur, they can
resolve
them without broadcasting to the whole network.
Because
the size of each node's environs
is small and does
not depend on the size of the network, stochastic
distributed crypto-networks
are scalable
and can handle a much higher volume
of transactions.
The
stochastic crypto-network
design can
guarantee application data integrity, as the consensus is reached
synchronously for each block and forks disappear.
The costs associated with mining and verifying (rewards and fees) also disappear.
The costs associated with mining and verifying (rewards and fees) also disappear.
As
an incentive to become a
node of the
network,
users can
issue free
financial transactions, receive
a secure
wallet acting as an interest-bearing
savings account, and may
run highly scalable
blockchain applications on their device.
At
least one stochastic unpermissioned network (GNodes by
Gorbyte) plans to be operational by the end of 2019 with:
-
a fully functional downloadable client code on desktops, laptops or mobile phones
-
a replica of blockchain on each and every node
-
high performance and scalability, as part of a truly distributed, unpermissioned network
-
guaranteed blockchain integrity, network security and transaction verification
-
zero network operation cost, providing no-fee financial transactions
-
a rebased, non volatile currency for practical utility
-
a distributed operating environment for scalable blockchain applications
Stochastic,
fully-distributed
crypto-networks
will soon
revitalize
the blockchain industry,
disrupt crypto-mining industries, reduce energy utilization, provide
an alternative to current crypto-networks and effectively
revolutionize the distributed application world.
______________
Giuseppe
Gori is the CEO of Gorbyte (gorbyte.com). The company is currently
raising private funds through a security token offering and will
raise public funds in an STO early next year in partnership with
DealBox (Carlsbad, CA, USA) and TokenIQ (Scottsdale, AZ). The funds are being used for the
development of GNodes, Gorbyte's vision for a stochastic, fully
distributed network featuring no-fee basic transactions with a
non-volatile currency.
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