Proof-of-X

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General

Goal: Secure updating of a state

Block time: trade off between time


Proof of Work

  • Right to create new block: be the first to solve a puzzle based on consumption of a resource external to the system
  • Miners choose one of all possible forks to contribute to (or splits among chains but with reduced efficiency per chain)

Light Clients

Algorithm:

  • Download block headers from peers, consisting of
    • Merkle root
    • Hash value from previous block
    • Nonce
  • Verify proof-of-work for each block header: hash(Merkle root, previous hash, nonce) < target (based on difficulty)
  • Consider longest chain (the one with the most work in it) as the true chain
  • To find UTXOs:
    • (optional) Light Client: Build Bloom filter for the desired transaction (a Bloom filter allows for testing set membership; it can have false positives but no false negatives)
    • Light client: Send request to a full node: "Please give me all partial Merkle branches that match the Bloom filter for the given block"
    • Full node: Send the matching transactions and the other needed hashes from the Merkle tree to the light client (see, e.g., Merkle tree)
    • Light client: Calculate hash for the transaction, combine with other needed hashes until the Merkle root is reached, check that the Merkle root matches the one from the previously downloaded block headers
    • The link from the transaction to the Merkle root shows that a transaction is indeed contained in a block; the requested block is linked to the rest of the blockchain via the PoW; the combination of both links proves that the transaction is recorded in the blockchain (received data: about 1KB instead of 1MB for a entire block)

Problems:

  • Depends on the willingness of full nodes to provide the requested information and they don't have an incentive for doing so
  • Full nodes can fool light clients and can say that a transaction is not included in a block (but they can not say that a transaction is included in a block when in fact it is not)

Advantages

Disadvantages

Proof of Stake

Light Clients

Advantages

Disadvantages

  • Nothing at stake: Miners (voters) can vote on all forks of a blockchain