Blockchain isn’t just a tech term. It is an infinite spectrum of unusual technological terms. Some of these are discussed below:
- Proof of Work
This is a protocol that to dissuade denial of service cases and other abuses such as spamming of network. The term was coined as early as in 1993.
There are two classes of proof of work potocols:
Challenge-response protocol aims to establish a one-on-one link between the clients and the server. The client challenges the server with an item in a set with a property, the requester finds the relevant response in the set, which is sent back and checked by the server.
Solution verification protocol, on the other hand, imposes the problem on the client side to seek a solution, and the server checks both the problem choice and the found solution. Hashcash uses this protocol as its basis.
Hashcash is popular proof-of-work algorithm, currently finding main application in the field of Bitcoin (or other cryptocurrency) mining. For simpler uses cases such as in email, a hashcash code is added to the header of an email to show that the sender has taken a certain amount of time to generate the stamp and send the email, which certainly means he isn’t spamming. The receiver can thus, easily validate the stamp without much expanse.
Though, hashcash has certain advantages, but also comes with drawbacks such as requirement of computational resources. Another problem is that the problem grows over time. However, developing countries can be expected to use older hardware, which means that they will find it increasingly difficult to participate in the email system. This also applies to lower-income individuals in developed countries who cannot afford the latest hardware.
- Proof of Stake
This is used to attain a distributed consensus in a distributed ledger. Proof-of-stake uses proof of ownership of a certain amount of cryptocurrency. Peercoin was the first cryptocurrency to launch using proof-of-Stake. And now, it has eventually taken over ShadowCash, Nxt, BlackCoin, NuShares/NuBits, Qora and Nav Coin. Further, Ethereum is also planning to shift from PoW to PoS soon.
The randomized block selection enables finding out lowest hash value with respect to the stake size. The stakes being public, every node can accurately predict who will forge the upcoming block. This is used by Nxt and BlackChain.
Coin-age based selection has combined the concept of “coin age” with that of randomization. Older and larger sets of coins have a greater probability of signing the next block. However, when one stake forges a block, the coin age reverts to zero again. This process does not require much computational resources but doesn’t compromise with security. Peercoin implements this protocol.
- Multisig Wallet
Multisignature specifies that authorization of a Bitcoin transaction requires more than one signature (or key). These wallets have an unsung potential to increase security of funds. Bitcoin 1.5 was a concept that was first put to practice in 2011-12 and formalized the original Bitcoin 1.0 into multisignature (or multisig) transactions.
In Bitcoin 1.0, a private key is assigned to a node and the key-holder is thus granted full control over the funds. With Bitcoin 1.5 (or multisig edition of Bitcoin), you can have a Bitcoin address with three associated private keys, two of which can be used at a time to transfer funds.
- Merged Mining
Merged mining is a process in which two different cryptocurrencies with same algorithm to be mined simultaneously. The now hash powered cryptocurrencies to leverage their hashing power behind their network by bootstrapping onto more popular cryptocurrencies. Both litecoin and dogecoin, as well as namecoin and bitcoin with sha-256 are the best examples of merged mining techniques.
Merged mining is a tough technique after all. The blockchain with higher hashing power cryptocurrency is called as parent and the other one is called auxiliary blockchain.
Hitesh Malviya is the Founder of ItsBlockchain. He is one of the most early adopters of blockchain & cryptocurrency enthusiast in India. After being into space for a few years, he started IBC in 2016 to help other early adopters learn about the technology.
Before IBC, Hitesh has founded 4 companies in the cyber security & IT space.