[Nr.10]

Bitcoin Witboek:

Bitcoin: A Peer-to-Peer Electronic Cash System
_{pdf
oktober 2008}

Waar zit de grootste innovatie in het Witboek van de Bitcoin blockchain?
Antwoord: het consensus-mechanisme dat gebruikt word = Proof-of-Work = PoW.

Explaining blockchain — how proof of work enables trustless consensus
The main innovation that Satoshi Nakamoto introduced in his article is using so-called proof of work (POW) to create distributed trustless consensus and solve the double-spend problem. POW is not a new idea, but the way Satoshi combined this and other existing concepts — cryptographic signatures, merkle chains, and P2P networks — into a viable distributed consensus system, of which cryptocurrency is the first and basic application, was quite innovative.

Proof of work is a requirement that expensive computations, also called mining for reasons which later will become clear, be performed in order to facilitate transactions on the blockchain. To understand the link between computational difficulty and trustless consensus within a network implementing a distributed cryptocurrency system is a serious mental feat. With this writing I hope to help those who are attempting it.

Because distributed trustless consensus is the primary innovation of blockchain technology, we start by understanding what it is. As the term suggests, there are three parts to the puzzle: (1) consensus, (2) distributed, and (3) trustless. Having explained the three terms, I will synthesize them by illustrating the problem that arises when you put all three together. In the process we will see how a distributed ledger based on POW solves this problem.

What is consensus?
(...)

Distributed
(...)

Trustless
(...)

PoW Blockchain
(...)

Bitcoin approach
(...)

Proof of work
(...)

Conclusion
When presented with a new cryptocurrency solution, the reader is now empowered to ask herself, based on the above explanation, how it is that the solution achieves distributed trustless consensus. Similarly, when considering using a system based on POW, the reader is in position to understand that POW is only useful when trustless consensus is required, otherwise it is an expensive and needless waste of resources.

There now exist solutions which do not use blockchains, but still strive to achieve distributed trustless consensus, Iota being one example. Furthermore, there are so-called consortium blockchains, which apply some of the ideas developed in decentralized cryptofinance to facilitate transactions between mainstream financial entities. While it is not clear what exact approach they will use, it is clear from the above explanation that POW would be a feature entirely unnecessary in such systems, since they don’t have to function in a trustless fashion.

With all the hype around cryptotechnology I hope that this article could be helpful in navigating the complexity and diversity of this space.

BRON
_{3 mei 2016}