Seed - Literature Review - Conclusion - The Flaws of Proof-of-Work (Part 5)
This literature review will focus on the flaws surrounding proof-of-work, how it causes a misalignment of interests in users, the inefficiencies of the mechanism, and explored alternative mechanisms.
Part 1 - Introduction to the Flaws of Proof-of-Work
Part 2 - Misalignment of Interests
Part 3 - Inefficiencies in Proof-of-Work
Part 4 - Alternative Mechanisms to Proof-of-Work
Conclusion on the Flaws of Proof-of-Work
The proof-of-work mechanism requires a large amount of energy consumption to secure the network, which may be replaceable with a more efficient protocol energy-usage wise. Proof-of-stake is the main competitor, which uses substantially less energy on average, however still suffers from various other issues with proof-of-work. Proof-of-stake and other cryptocurrencies require a two-step propagation technique where first a transaction is propagated to the network (e.g. Bob sends $10 to Bill) and second where a block containing the transactions is propagated to the network after validation (e.g. Bill see’s in the new block that he received $10 from Bob). This validation step occurs due to the model most mechanisms follow where a certain type of user (Miners, Consensus Nodes, Witnesses, etc.) handle block creation and validation. This step adds an extra delay, as well as can often misalign the interests of users, since the general users of a network may desire something different than the people creating and validating blocks. For example, in Bitcoin, users want a quick network with low fees while maintaining the security, while miners are incentivized to earn as much money as possible for their hardware investment. These misalignment of interests can lead to a split in the community or often forks in the network between competing camps.
None of these methods, however, is perfect in any way, they all have their strengths and weaknesses. One strength that has not been proven in any mechanism, however, would be a mechanism that minimizes ping, maximizes scalability and can handle high demand networking requirements. For example, there is no protocol that has shown to reliably handle a near-real time MMO in a scalable manner.
From a mechanism viewpoint, I believe it has not been explored enough treating transactions as modifications of blockchains by causal effect relationships. Following a pattern like this, it may be possible to take a game world, implement peoples changes, playing on their behalf, and using this gameplay itself as a form of validation that the worlds are in agreement.
From a socio economic viewpoint, I believe it has not been explored enough in blockchain technology to view transaction confirmation as a cooperative activity of users validating one-other, rather than a competitive activity of miners trying to beat one other.
The lack of alternatives that fit this networking niche use of blockchains, as well as the beliefs I’ve outlined above, both lead to the question, “How would one replace competitive proof-of-work with cooperative proof-of-gameplay for decentralized blockchain game servers”. The previous papers I’ve referenced on proof-of-stake, and proof-of-activity all attempted to fix various parts of proof-of-work, each under their own constraints. Other papers I’ve read, specifically on Smart Contracts [7][8] but also on transaction channels [9][10], have shown how one can execute useful work on the blockchain in a timely manner, with transaction channels doing so utilization a second layer solution. My research question is effectively intending on creating an alternative mechanism to proof-of-work which treats all users as equals, does not inherently require a underlying currency (though it may), and allows for gameplay to execute across the blockchain in near real-time conditions.
[7] Buterin, V. (2014). A next-generation smart contract and decentralized application platform. white paper.
[8] Kosba, A., Miller, A., Shi, E., Wen, Z., & Papamanthou, C. (2016, May). Hawk: The blockchain model of cryptography and privacy-preserving smart contracts. In Security and Privacy (SP), 2016 IEEE Symposium on (pp. 839-858). IEEE.
[9] Decker, C., & Wattenhofer, R. (2015, August). A fast and scalable payment network with bitcoin duplex micropayment channels. In Symposium on Self-Stabilizing Systems (pp. 3-18). Springer International Publishing.
[10] Kraft, D. (2016). Game Channels for Trustless Off-Chain Interactions in Decentralized Virtual Worlds. Ledger, 1, 84-98.
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