Consensus algorithms upon which blockchains run are the fundamental determinants of their governance systems and the extent of decentralization effective within their networks. Right from the very first blockchain that was created, the overall intention of Satoshi Nakamoto was to establish a network where every participant will reserve some power and influence over the important processes involved in maintaining the network.
Blockchain’s Limited Protocols
Bitcoin blockchain is governed by the Proof of Work (PoW) algorithm. The PoW algorithm consists of miners who contribute computing power to solve hashes and verify transactions over the network. Satoshi’s original intention may have been to have millions of computers in different parts of the world solving hashes and earning rewards for their works. This is no longer the case as today we have just a few large mining farms in regions with relatively cheap electricity that monopolize the mining practice. This situation raises a lot of questions about the true decentralization of the Bitcoin blockchain.
Another blockchain algorithm that operates an entirely different system is the Proof of Stake (PoS) algorithm that is made popular by the Ethereum blockchain. The PoS algorithm allows only stakeholders who run nodes of such a network to participate in the decision making processes, hence due for rewards(mining). The twist here as well is that the voting power of network participants is determined by the number of nodes run, which is in turn a function of wealth. Therefore, just like the PoW system described above, this PoS system also leaves room for a lopsided approach to actual decentralization.
An Expected Intervention
Inasmuch as early blockchain platforms are showing certain deficiencies in terms of governance and transaction execution, such a development isn’t totally unexpected, hence the open source nature of their codes which allow modifications and improvements from the very beginning. In the same vein, beyond the PoW and PoS algorithms of Bitcoin and Ethereum, more efficient purpose built platforms are offering effective distributed systems that pursue the ultimate goal of true decentralization and improved solutions.
Skycoin’s consensus algorithm, Obelisk is a typical example of a new generation blockchain protocol that upholds the tenets of true decentralization. Unlike the PoW and PoS algorithms that have no protocol to restrain greed and the eventual lopsided nature of the blockchains, Obelisk introduces a web of trust. This web of trust solves such issues as centralization, 51% attacks, mining problems, slow transaction speeds, energy waste and other critical disadvantages that old consensus algorithms face.
The Obelisk protocol introduces a blockchain that does not require any form of mining procedure. This de-emphasizes the unhealthy political struggle that exists within the PoW and PoS systems. This restores the original value of crypto-tokens, severing them from any comparative influence that fuels the competition between members of the community, thereby eliminating the risk of 51 percent attack. Thus, the crypto-tokens will act more like a form of digital property in the straightforward sense.
Restoring Confidence in the Technology
Just like the effect of the internet and the revolution that it has caused in the world of information technology, having significant impact on human development in general, blockchain has been heralded as the next disruption. It is a technology that is expected to affect every industry, and introduce a lot of changes in the general processes around the world. This idea is still valid, even though the early blockchains have failed in some areas to deliver the full benefits of decentralization.
With the advent of Skycoin and its Obelisk protocol, confidence and belief is being restored. In the Obelisk “web of trust”, every node has a list of other nodes that it subscribes to, and the density of a node’s network of subscribers determines its influence on the network. Each node is assigned a personal blockchain which acts as a “public broadcasting channel” on which all of a node’s actions are visible and publicly recorded.
As all consensus decisions and communication occur through the personal blockchains of each node, the community can very easily audit nodes for cheating or collusion. How decisions on the network are made and which nodes influence those decisions is completely transparent.
Blockchain is a technology that should enable true democratization. Its original design is to decentralize control and revenue acquisition, giving every participant an equal opportunity to function effectively within a secure and transparent ecosystem. While preceding protocols may not have succeeded in delivering these benefits, Skycoin’s Obelisk offers the undaunting solution and final stop to actual decentralization.
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