Grayblocks Has Compared The Limitations Of Proof-of-Work Distributed Consensus Algorithms
By Luke Flowers – Cryptocurrency Enthusiast
Grayblock which describes themselves as a diverse group of researchers have released their analysis on the limitation of Proof-of-Work (PoW) distributed consensus algorithms. Grayblock have a background in supply chain management with a current focus on building blockchain and Internet-of-Things (IoT) solutions to assist when buying crypto and the industry.
Their findings suggest that PoW-based systems incur a fundamental flaw in which PoW finality and the consensus mechanism will always allow for a chance of being overtaken by another competing chain and potentially reverting transactions. This means that no matter how many confirmations a transaction may have, transaction finality could never be fully guaranteed using this consensus. A trader may buy Bitcoin Cash (BCH) which uses the PoW consensus algorithm for the chain to undergo a hardfork potentially reverting transactions, which is not viable for many users.
Grayblock have also elaborated that adjusting PoW algorithms with increases to block size and decreasing block frequency has its limitations as these are dependent on how fast transactions and blocks are generated on the network.
Another issue with PoW cited by Grayblock occurs due to the requirement of all nodes on the network verifying each block as well as all transactions. When buying Bitcoin, every node is required to verify the transaction which results in the network only processing as many transactions as one node can independently. The throughput of PoW systems and transactions per second can be increased but will still experience the restraint of the single node issue if buying Bitcoin or another using the same consensus algorithm.
Grayblocks’ findings suggest that blockchains that use PoW-based consensus algorithms will always incur the inherent risk of a competing chain overtaking the network.
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