A $3.3 Billion Claim: Has Cardano’s Blockchain ‘Solved’ Proof-of-Stake?

“Proof-of-stake is solved.”

Even in an industry that’s seen no shortage of grand proclamations, those words, issued by entrepreneur Charles Hoskinson in April, grabbed attention.

The CEO of blockchain firm IOHK (and one-time CEO of Ethereum), Hoskinson was seeking to send a message about a new research paper, one he believes proved that the company’s novel twist on how blockchains come to consensus, called Ouroboros, had addressed long-standing concerns about whether the model can sufficiently secure investor funds.

Given the size of the claim (and its impact), it’s an assertion that sparked doubt from cardano’s more prominent competitors. However, months later the team at IOHK maintain Ouroboros may be the answer to one of crypto’s most divisive questions – whether so-called proof-of-stake systems offer solutions to some of the industry’s pressing problems.

So far, the market appears to be interested in the opportunity to support the thesis.

Soon to power the public blockchain cardano, Ouroboros may one day support the world’s eighth-largest cryptocurrency, with its 25 billion ADA tokens worth $3.3 billion. And a look at the history of proof-of-stake systems perhaps showcases why so much money is on the line.

First pitched by developers Scott Nadal and Sunny King in 2012, proof-of-stake offers what is claimed to be a more sustainable alternative to proof-of-work, the consensus method underlying the world’s biggest blockchain by market cap, bitcoin.

Allowing users to vote or “stake” their coins on a transaction history in exchange for rewards (instead of burning computational energy), it’s relatively untested, having so far only been adopted in hybrid, small-scale or delegated formats.

So, while bitcoin’s security is comparatively proven (its blockchain is currently sustaining $114 billion and has held up for years), many crypto coders believe proof-of-stake is necessary to transition the industry into the next phase, in which users no longer have to own hardware in order to claim a blockchain’s rewards.

The trouble is, no one can agree on how this should be done.

“Different consensus algorithms do well in different environments,” Nate Rush, a proof-of-stake researcher for ethereum, told CoinDesk, “If the assumptions that some protocol is ‘solved’ under turn out to break or be unrealistic, then this protocol can fail.”

Still, the team behind cardano, IOHK, have worked to secure academic partnerships, as well as relationships with researchers in the field distributed computation in an effort to prove the proof-of-stake model can be achieved.

Taking the security of bitcoin as its starting point, the chief scientist behind the protocol, Aggelos Kiayias, has created formal proofs for each step of the protocol’s design, used to dispel doubt as to the algorithm’s ability to protect assets.

Kiayias told CoinDesk:

“Contrary to [other proof-of-stake protocols], we developed Ouroboros together with a formal proof of security that the protocol indeed captures the security properties of a robust transaction ledger like bitcoin.”

Peer-reviewed protocol

But it’s not just proof-of-stake researchers that disagree – in the broader landscape of consensus design, there’s some who believe proof-of-stake is doomed from the start.

For example, Dahlia Malkhi, a distributed system researcher, claimed earlier this year that ethereum’s proof of stake model, Casper, is “fundamentally vulnerable”- leading to a system where consensus is powered by the wealthy.

Yet, in this atmosphere of skepticism, cardano has amassed a high degree of academic support, building strategic university relationships through IOHK- a for-profit company with centers in several universities, including the Toyko Institute of technology in Japan, University of Athens, and University of Edinburgh.

“We basically have a kind of a university-company relationship, so what we generally do is we set up research centers, we embed some IOHK personnel within those research centers, and we subsidize the lab, and then we have some sort of control or influence over the research agenda,” Hoskinson said.

Responsible for ethereum classic, zencash, as well as cardano itself, according to Hoskinson, these academic partnerships feedback into the IOHK’s cryptocurrency solutions.

“Generally, the output of this relationship are peer-reviewed papers and we have a team within IOHK that take those papers, extract specifications from them and then put them in the pipeline for implementation into products,” Hoskinson continued.

Alongside further relationships at Lancaster, Kent university, Oxford, and Illinois, the advantage is that the relatively small pool of researchers equipped in the topic have had their eyes on Ouroborus, which has been toured around at various academic conferences as well.

“We’ve brought in the total set of people who are actually looking at trying to break, trying to enhance, our core protocols, and there’s a lot of hard work that has been achieved as a result of that,” Hoskinson told CoinDesk.

Gearing up to become a fully fledged smart contract and cryptocurrency platform, cardano currently has limited functionality, but it is introducing the necessary features to transition to proof-of-stake throughout this year.

Currently tweaking the final details under simulations, Hodskinson urged that Ouroborus comes with advantages over other protocols. For example, he says the system is the only one that will allow users to stake from cold storage, and use multiple addresses to manage their finances.

Hoskinson told CoinDesk:

“The long-term goal is to try to completely replicate all of the security capabilities and functional capabilities that the proof-of-work system has without actually having to expend any of the electricity or effort that proof-of-work does, and it looks like, now that we’ve put about two-and-a-half years of research into this thread, Ouroboros is now converging to that stage.”

Theoretical unknowns

Still, at the time of writing, it’s unclear how the protocol will behave in the wild, and there’s ways in which the wider proof-of-stake research community hasn’t been entirely receptive of cardano’s claims.

For example, no one has been as critical as EOS’s creator Dan Larimer, a former colleague of Hoskinson, who wrote that not only is “Ouroboros is a 400-pound bulletproof vest that doesn’t actually stop the real bullets,” but claimed it was a badly conceived variant of an algorithm he had designed in 2014.

(EOS uses a form of proof-of-stake that relies on delegated nodes that have been nominated the task of reaching consensus.)

Ethereum, of which Hoskinson was a co-founder, has also signalled skepticism.

For example, speaking on reddit, ethereum founder Vitalik Buterin warned one security assumption of the blockchain could allow hacker to create false histories on the blockchain.

There’s also different approaches to design. While the protocol itself is in place, IOHK are still working on building the underlying incentive scheme, something that Casper researcher Vlad Zamfir believes should be designed in tandem with the tech.

Attempts by CoinDesk to engage researchers with published work on proof-of-stake also returned mixed results, with several offering no comment or suggesting they hadn’t yet looked into the technology and its specific claims.

Theory meets reality

But according to Emin Gün Sirer, a Cornell University professor and researcher in consensus protocols, this is typical of the field.

“Ouroboros has the advantage that it is peer reviewed and a well-credentialed research group stands behind the effort,” Gün Sirer told CoinDesk, “But it also suffers from a downside that plague many early proof-of-stake protocols, namely: the papers are long, dense and full of subtle proofs.”

As a result, Gün Sirer said, “No two researchers in this area seem to agree on which papers have valid proofs and which have redefined the properties so as to make proofs meaningless. The academic community vets papers for academic rigor, not real world application.”

That said, Hoskinson believes this interaction with academia is essential for cryptocurrencies to migrate onto the next phase. He warned that while many blockchains make wide claims for the scalability and security of their product, there’s not many laymen with the skillset to properly evaluate those claims.

As such, Hoskinson said he anticipates more research on Ouroboros and cardano to emerge going forward.

“We all talk about the Tendermints and the Decreds and the Caspers because these are industry accepted ones and they have good marketing,” Hoskinson said.

However, he continued:

“If you look under the current there’s an increasing professionalization of the cryptocurrency space… serious scientists who have great credentials and are utilizing the peer review process and bringing decades of knowledge with them.”

Rubix cube via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

Be the first to comment

Leave a Reply

Your email address will not be published.


*


Privacy Policy

WideBitcoin.com is committed to safeguarding your privacy. Contact us at if you have any questions or problems regarding the use of your Personal Data and we will gladly assist you.

By using this site or/and our services, you consent to the Processing of your Personal Data as described in this Privacy Policy.

Table of Contents

  1. Definitions used in this Policy
  2. Data protection principles we follow
  3. What rights do you have regarding your Personal Data
  4. What Personal Data we gather about you
  5. How we use your Personal Data
  6. Who else has access to your Personal Data
  7. How we secure your data
  8. Information about cookies
  9. Contact information

Definitions

Personal Data – any information relating to an identified or identifiable natural person.
Processing – any operation or set of operations which is performed on Personal Data or on sets of Personal Data.
Data subject – a natural person whose Personal Data is being Processed.
Child – a natural person under 16 years of age.
We/us (either capitalized or not)

Data Protection Principles

We promise to follow the following data protection principles:

  • Processing is lawful, fair, transparent. Our Processing activities have lawful grounds. We always consider your rights before Processing Personal Data. We will provide you information regarding Processing upon request.
  • Processing is limited to the purpose. Our Processing activities fit the purpose for which Personal Data was gathered.
  • Processing is done with minimal data. We only gather and Process the minimal amount of Personal Data required for any purpose.
  • Processing is limited with a time period. We will not store your personal data for longer than needed.
  • We will do our best to ensure the accuracy of data.
  • We will do our best to ensure the integrity and confidentiality of data.

Data Subject’s rights

The Data Subject has the following rights:

  1. Right to information – meaning you have to right to know whether your Personal Data is being processed; what data is gathered, from where it is obtained and why and by whom it is processed.
  2. Right to access – meaning you have the right to access the data collected from/about you. This includes your right to request and obtain a copy of your Personal Data gathered.
  3. Right to rectification – meaning you have the right to request rectification or erasure of your Personal Data that is inaccurate or incomplete.
  4. Right to erasure – meaning in certain circumstances you can request for your Personal Data to be erased from our records.
  5. Right to restrict processing – meaning where certain conditions apply, you have the right to restrict the Processing of your Personal Data.
  6. Right to object to processing – meaning in certain cases you have the right to object to Processing of your Personal Data, for example in the case of direct marketing.
  7. Right to object to automated Processing – meaning you have the right to object to automated Processing, including profiling; and not to be subject to a decision based solely on automated Processing. This right you can exercise whenever there is an outcome of the profiling that produces legal effects concerning or significantly affecting you.
  8. Right to data portability – you have the right to obtain your Personal Data in a machine-readable format or if it is feasible, as a direct transfer from one Processor to another.
  9. Right to lodge a complaint – in the event that we refuse your request under the Rights of Access, we will provide you with a reason as to why. If you are not satisfied with the way your request has been handled please contact us.
  10. Right for the help of supervisory authority – meaning you have the right for the help of a supervisory authority and the right for other legal remedies such as claiming damages.
  11. Right to withdraw consent – you have the right withdraw any given consent for Processing of your Personal Data.

Data we gather

Information you have provided us with
This might be your e-mail address, name, billing address, home address etc – mainly information that is necessary for delivering you a product/service or to enhance your customer experience with us. We save the information you provide us with in order for you to comment or perform other activities on the website. This information includes, for example, your name and e-mail address.

Information automatically collected about you
This includes information that is automatically stored by cookies and other session tools. For example, your shopping cart information, your IP address, your shopping history (if there is any) etc. This information is used to improve your customer experience. When you use our services or look at the contents of our website, your activities may be logged.

Information from our partners
We gather information from our trusted partners with confirmation that they have legal grounds to share that information with us. This is either information you have provided them directly with or that they have gathered about you on other legal grounds. See the list of our partners here.

Publicly available information
We might gather information about you that is publicly available.

How we use your Personal Data

We use your Personal Data in order to:

  • provide our service to you. This includes for example registering your account; providing you with other products and services that you have requested; providing you with promotional items at your request and communicating with you in relation to those products and services; communicating and interacting with you; and notifying you of changes to any services.
  • enhance your customer experience;
  • fulfil an obligation under law or contract;

We use your Personal Data on legitimate grounds and/or with your Consent.

On the grounds of entering into a contract or fulfilling contractual obligations, we Process your Personal Data for the following purposes:

  • to identify you;
  • to provide you a service or to send/offer you a product;
  • to communicate either for sales or invoicing;

On the ground of legitimate interest, we Process your Personal Data for the following purposes:

  • to send you personalized offers* (from us and/or our carefully selected partners);
  • to administer and analyse our client base (purchasing behaviour and history) in order to improve the quality, variety, and availability of products/ services offered/provided;
  • to conduct questionnaires concerning client satisfaction;

As long as you have not informed us otherwise, we consider offering you products/services that are similar or same to your purchasing history/browsing behaviour to be our legitimate interest.

With your consent we Process your Personal Data for the following purposes:

  • to send you newsletters and campaign offers (from us and/or our carefully selected partners);
  • for other purposes we have asked your consent for;

We Process your Personal Data in order to fulfil obligation rising from law and/or use your Personal Data for options provided by law. We reserve the right to anonymise Personal Data gathered and to use any such data. We will use data outside the scope of this Policy only when it is anonymised. We save your billing information and other information gathered about you for as long as needed for accounting purposes or other obligations deriving from law, but not longer than 1 year.

We might process your Personal Data for additional purposes that are not mentioned here, but are compatible with the original purpose for which the data was gathered. To do this, we will ensure that:

  • the link between purposes, context and nature of Personal Data is suitable for further Processing;
  • the further Processing would not harm your interests and
  • there would be appropriate safeguard for Processing.

We will inform you of any further Processing and purposes.

Who else can access your Personal Data

We do not share your Personal Data with strangers. Personal Data about you is in some cases provided to our trusted partners in order to either make providing the service to you possible or to enhance your customer experience. We share your data with:

Our processing partners:

  • facebook.com
  • google.com
  • bing.com
  • twitter.com
  • pinterest.com

Our business partners:

  • facebook.com
  • google.com
  • bing.com
  • twitter.com
  • pinterest.com

Connected third parties:

  • facebook.com
  • google.com
  • bing.com
  • twitter.com
  • pinterest.com

We only work with Processing partners who are able to ensure adequate level of protection to your Personal Data. We disclose your Personal Data to third parties or public officials when we are legally obliged to do so. We might disclose your Personal Data to third parties if you have consented to it or if there are other legal grounds for it.

How we secure your data

We do our best to keep your Personal Data safe. We use safe protocols for communication and transferring data (such as HTTPS). We use anonymising and pseudonymising where suitable. We monitor our systems for possible vulnerabilities and attacks.

Even though we try our best we can not guarantee the security of information. However, we promise to notify suitable authorities of data breaches. We will also notify you if there is a threat to your rights or interests. We will do everything we reasonably can to prevent security breaches and to assist authorities should any breaches occur.

If you have an account with us, note that you have to keep your username and password secret.

Children

We do not intend to collect or knowingly collect information from children. We do not target children with our services.

Cookies and other technologies we use

We use cookies and/or similar technologies to analyse customer behaviour, administer the website, track users’ movements, and to collect information about users. This is done in order to personalize and enhance your experience with us.

A cookie is a tiny text file stored on your computer. Cookies store information that is used to help make sites work. Only we can access the cookies created by our website. You can control your cookies at the browser level. Choosing to disable cookies may hinder your use of certain functions.

We use cookies for the following purposes:

  • Necessary cookies – these cookies are required for you to be able to use some important features on our website, such as logging in. These cookies don’t collect any personal information.
  • Functionality cookies – these cookies provide functionality that makes using our service more convenient and makes providing more personalised features possible. For example, they might remember your name and e-mail in comment forms so you don’t have to re-enter this information next time when commenting.
  • Analytics cookies – these cookies are used to track the use and performance of our website and services
  • Advertising cookies – these cookies are used to deliver advertisements that are relevant to you and to your interests. In addition, they are used to limit the number of times you see an advertisement. They are usually placed to the website by advertising networks with the website operator’s permission. These cookies remember that you have visited a website and this information is shared with other organisations such as advertisers. Often targeting or advertising cookies will be linked to site functionality provided by the other organisation.

You can remove cookies stored in your computer via your browser settings. Alternatively, you can control some 3rd party cookies by using a privacy enhancement platform such as optout.aboutads.info or youronlinechoices.com. For more information about cookies, visit allaboutcookies.org.

We use Google Analytics to measure traffic on our website. Google has their own Privacy Policy which you can review here. If you’d like to opt out of tracking by Google Analytics, visit the Google Analytics opt-out page.

Read more about cookies on our Cookie Policy

Contact Information

email: [email protected]

Changes to this Privacy Policy

We reserve the right to make change to this Privacy Policy.

You can configure your Internet browser, by changing its options, to stop accepting cookies completely or to prompt you before accepting a cookie from the website you visit. If you do not accept cookies, however, you may not be able to use all portions of the WideBitcoin Websites or all functionality of the Services.

Please note that disabling these technologies may interfere with the performance and features of the Services.

You may also disable cookies on the WideBitcoin Sites by modifying your settings here:

Visitor comments may be checked through an automated spam detection service.

Last Update: May 25, 2018