🎯 Differences of Proof of Stake, Proof of Work, or Proof of History? (part 3). We are back again with the next part where we are going to explain different blockchain consensus mechanisms. With the examples of Proof of Stake and Proof of Work consensus mechanisms, we know that they are responsible for the proper and safe transaction management within a blockchain and creating the new blocks that are being added to a chain.
In the previous parts, we’ve come to the inherency of PoS and PoW blockchain consensus mechanisms, which has shown that both PoS and PoW are strictly requiring the blockchain validators consistently communicate with each other in order to agree (reach consensus) one another in order to agree on the transactions that are going to be recorded in a blockchain ledger. The same goes for the new block creations and verification.
Subsequently, that is the core why both PoS and PoW take such a long time and high fees in order to process the transactions.
Blockchain networks that are running on PoS and PoW are verifying transactions way slower due to their inherency. Furthermore, PoW consumes more power resources and requires a tremendous amount of time in order to verify transactions in comparison with centralized payment systems. The approximate time for creating a new block in Ethereum can be at max about 20 minutes, and even longer during the very busy uptimes.
Okay, that is pretty fascinating, but what does it have to do with the Proof of History?
📝 The Solution?
The key to eliminating the PoS and PoW problems had to be highly secure by still using hashes and maintaining the decentralized network’s nature. The culprit for PoS and PoW was that those mechanisms have never dealt with the cryptographic clock. That was the solution.
⛓ Proof of History (PoH)
However, we are explaining the consensus blockchain mechanisms, some experts do not consider the PoH as the blockchain consensus mechanism. PoH is mostly described as the cryptographic clock solution for blockchain networks.
Proof of History is based on the timestamped events (events regarding recording the transactions in a ledger, including creating the new blocks) that are already verified, so nodes (blockchain networks participators, i.e computers) don’t have to continuously interact with each other in order to verify transactions.
⏱ What is the cryptographic clock?
Every timestamp is guaranteed with cryptographic proof of the consecutive time order of events that are going to be put in the historical ledger record.
PoH work in the same way when verifying SHA-256 hashed transactions by using recursive verifiable delay function. Every hashed transaction appeared with a unique and unforgeable timestamp. Similarly to how Google data centers synchronize their so-called atomic clocks to achieve seamless maintaining of data securing solidness and correctness of those data.
Blockchains with PoH are keeping their decentralized nature by implementing a verifying delay function.
So, the timestamps that are integrated with every hashed transaction are not using any centralized time clock source, which can be faulty. Instead, the verifying delay function ensures that every upcoming transaction and a new block proposer must have spent the allowable amount of time in order to be even considered by a network.
All these described mechanisms derive many benefits for the blockchain networks that run on PoH by at least, solving a long time of block creation and verifying new transactions. That opens up a great potential for blockchain running solutions, especially DeFi wise.
We can’t really clearly distinguish the current downsides of the PoH method. However, if in a mechanism like this the core of the whole process is exclusively dependent on timestamp validation, we can assume that some problems may occur only with a faulty verifiable delay function. The risks are quite difficult to assess at this moment.
You may know the most prominent blockchain and crypto project Solana that is initially launched the PoH as the new way of work for blockchain consensus mechanisms. Solana has shown the most positive results from being bounded with PoH, and it is their key game-changing distinction among other blockchain networks.
As blockchain developers, we think it is highly prioritized to educate more people about such important things in the blockchain world. We are aiming on cooperating with innovative crypto and blockchain projects that are keen on building their blockchain with the Proof of History mechanism.
We hope that we make it clear about the blockchain consensus mechanism in our post series about that. You are highly encouraged to ask any questions about that!