7. Distributed Ledger Technology (DLT)
For a decentralized network to function properly, most of the interconnected nodes powering the system must agree on what is true and democratically apply the rules. This consensus mechanism delegates the decision-making process to the group and is a self-governing alternative to centralized authority. However, for this system to function correctly, the nodes must be online at regular intervals to communicate and cast their vote to verify all the data processed through the network. Unfortunately, nodes are not infallible, and it is expected for them to sometimes break, malfunction, or just not agree with the general consensus. This flaw is a liability for the system and is referred to as the Byzantine Fault. This failure mode has been identified, named, and studied since 1982 and has been needed in airplane engine systems, nuclear power plants and pretty much any system whose actions depend on the results of many sensors.
In response to new and innovating distributed ledger technologies, there is a need for consensus mechanisms that can provide high transaction throughput and security, despite varying network quality. Functionality, stability, and security are imperative criteria to consider but scalability must not be overseen. In 2008 Nakamoto solved the Byzantine Fault problem using a Proof-of-Work mechanism in conjunction with a specific set of rules that govern the network. This combination allows for Bitcoin to prevent any malicious user from devaluating the currency by creating false transactions or swaying the general consensus. Although highly secure, this consensus method does face some issues that hinders its scalability and ability to grow after a certain point.
• Requires powerful hardware
• Every node must be operational and always synchronized (approx. 400 GB)
• High operational costs
• High energy consumption and high energy waste
• Prone to 51% attack:
In decentralized networks like Bitcoin every node maintains heartbeats with every other node; a periodic message sent to a central monitoring server or other servers in the system to show that it is alive and functioning. When a node is down, it simply stops sending out heartbeats, and all other connected nodes understand immediately. This method of constant communication between all nodes and all times is an expensive operation in any sizable cluster. Since then, more recent protocols have addressed this issue to facilitate scalability without compromising the security of the network.
The Asynchronous Byzantine Fault Tolerance (ABFT) consensus algorithm does not bundle data into blocks or use miners to validate transaction which allows it to run at a much faster pace and operate on lower costs. It uses the gossip-to-gossip protocol nodes periodically exchanging information about themselves and other nodes they know about. Every second, nodes send out this information to member of their cluster (clusters are assigned by programmable factors) and one other random node. This means that any new event eventually propagates through the system, and all nodes quickly learn about all other nodes in a cluster without the need to have all nodes communication with each other. This protocol drastically decreases the amount of energy required, runs on lighter GB power, and lowers the requirements to join the network. Broadening the accessibility is key in scalability because it allows everyone, including the less tech savvy individuals and less sophisticated devices, to contribute and expand the network. By simplifying the process of communication between nodes by implementing more innovative consensus algorithms, the blockchain technology is mutating into a more accessible and inclusive technology. As for today, the ABFT is the gold standard of protocols.
Innovative projects like Neo, Hedera and fantom are catalysts in this movement towards more regulated decentralized environments. The need for more transparency, privacy, must not come at the detriment of online safety.
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