In recent years, so-called blockchain technology, or “distributed ledger technology” (DLT), has grown rapidly. In particular, the increase in the value of Bitcoin and other cryptocurrencies, as well as the worldwide success of some large initial coin offerings (ICOs), have aroused public interest in developments around the world. digital.
One of the particularly interesting aspects of blockchain technology is the construction of decentralized consensus, obtained through the application of various consensus mechanisms. Most blockchain projects use one of the three most common consensus algorithms today: Proof of Work (PoW), Proof of Stake (PoS) or Delegated Proof of Stake (DPoS). All of these mechanisms are intended to ensure that all participants have identical copies of the distributed database files.
2. Proof of work (PoW)
Unlike other consensus mechanisms, the proof of work mechanism requires a lot of energy and computer power to reach a consensus and is therefore a very expensive option. The underlying idea is that the so-called “miners” of a network must prove that they have made some effort. Miners provide the computing power necessary to maintain the blockchain and verify transactions. At the same time, miners ensure the immunity of the network against hackers. They compete to chain a group of transactions, called “blocks” (“blockchain”). The blockchain contains all the verified transactions which are accessible to all participants in the network. Miners use so-called hash functions, that is, mathematical functions. Simply put, hashing means taking an input string of any length and outputting a fixed length. The real challenge lies in the fact that by solving mathematical puzzles, a result with certain characteristics must be obtained, which is derived from the hash function. By solving the mathematical puzzles, it can be proved that the transactions (i.e. the calculation path) were executed without error. If the block is then correctly extracted, it is attached to the blockchain and the first miner to solve the math puzzle is rewarded. The most well-known cryptocurrency using the proof of work mechanism is Bitcoin.
3. Proof of participation (PoS)
The idea of Proof of Stake (PoS) is to divide the voting power of a minor from its computing power, that is to say that PoS gives an operating power based on the percentage of tokens held by a minor. The larger his share of the total tokens, the more likely this miner is to be selected to extract the next block. However, the proof of stake mechanism uses a random algorithm to build a consensus. Although the quantity of tokens held (“bet”) is relevant (because the proportion of tokens held affects the probability that a minor is authorized or selected to extract the next block), several other factors play a role in the selection of the next minor. The main objective of PoS is to ensure that miners support the blockchain project in the long term. Projects that use the PoS mechanism include Dash and Neo.
4. Proof of delegated participation (DPoS)
The DPoS mechanism can be seen as a more democratic development of the PoS mechanism. In DPoS, those with the largest number of tokens are not allowed to confirm or validate transactions. All token owners select a group of delegates to perform this task. The mechanism remains decentralized because all network users are authorized to select the group of minors who confirms the transactions. On the other hand, the advantage of the centralized aspect of DPoS compared to the PoS mechanism lies in the higher speed of verification and transactions, which translates into high scalability. The EOS project and Lisk use the DPoS mechanism.
5. Consensus as a Service (CaaS)
The daura platform is based on the Hyperledger Fabric Blockchain protocol, a private blockchain infrastructure. One of the differences from the so-called “public blockchain protocols”, such as Bitcoin or Ethereum, is that running a private blockchain requires much less power and can only be used by users “on the list white “, that is to say known or recorded. For more information on private and public lighters, please read our article here.
daura relies on the Swiss mechanism “Consensus as a Service”, implemented by Swisscom. The two trusted partners PostFinance and Swisscom maintain the nodes of the daura blockchain on which they rely. They are authorized to validate transactions that are initiated on the daura platform. This validation consists of an automated, algorithmic and technical control of all the information entered on the platform. Among other things, this includes checking whether enough tokens for the respective transaction are registered on the blockchain- address of the transfer. In addition, it is checked whether the information to be transferred is valid or has already expired (i.e. have been used before). The content, however, is not revised.
Essentially, the mechanism works like a digital account book: all transactions are also visible and verifiable for all node operators. Trust is achieved through mutual verification of node operators and the unalterable storage of all generated data. The data is stored on highly secure and trustworthy data centers in Switzerland. CaaS aims to connect to an “open” ecosystem. Therefore, in addition to Daura, a number of other blockchain-based apps can purchase the CaaS service. In addition to existing node operators, additional operators can join and operate another node independently. All operators must meet all relevant security requirements and functionality. New node operators are selected by the existing ones.
The daura platform allows Swiss limited liability companies to keep their share registers automatically and digitally, as well as to issue new digital shares and participation certificates by means of capital increases. The processing of capital increases is thus digitized, and unlisted companies have access to a wide range of investors via the daura platform. In addition, the keeping of the share register is simplified thanks to the transfer of shares supported digitally, that is to say by using allocation declarations generated automatically via the platform. However, no exchange or settlement of share tokens based on the blockchain is made via the platform.