Suppose you log in to your current bank account: you will immediately see your current account balance, your deposit, how much money you owe on your credit card, and more. When you close the app, you have a confidence that the money is "your" and that any wire transfers or transactions on your card will be "settled" by the bank and the merchant and will not be too risky. The system "runs well" and you trust the system. But do you really have these funds? The digital ownership of assets is a concept that has been deeply rooted in our society since the Internet revolution. The notion of a digital password and an email address as our identity has been considered to serve as a standard for previous physical identity credentials. This phenomenon of digital ownership is not only artificial in nature, but also a highly social concept. Ownership of an asset has no meaning unless the ownership of the asset is recognized by someone else (the person you wish to trade with) .
We don't really own our digital currency, the bank really has it; then do we really own our cryptocurrency assets?
Blockchain technology reshapes our understanding of digital ownership. The key to our ability to control individual liberties is that we don't have to deposit hard-earned assets into the bank, but we can use powerful encryption technology to allow us to store cryptocurrency assets in blockchain books through our wallets. But even so, do we really have these cryptocurrency assets? As in the traditional financial system, the answer is no .
The concept of a blockchain wallet is indeed a misnomer. The wallet only stores keys, which give you the right to trade in value , which is the digital value that belongs to you as recognized by others in the agreement. Indeed, users have private keys that allow them to trade using the blockchain ecosystem, but these keys are just one type of unlocking the assets that exist in the blockchain network (that is, the entries in the decentralized ledger). ) The credentials for the access .
This article will focus on what the ownership in the PoW blockchain protocol means at the lowest level and explore its limitations.
The power of the PoW blockchain (such as Bitcoin) is that its security will increase over time . Each newly generated block represents the result of a collective race where miners use the fastest possible machine to find the answer to an encryption puzzle: in this competition, usually the most expensive and most efficient miners More advantage. Thousands of machines and mining equipment around the world have invested tens of millions of dollars in power and operating costs to participate in the mining of bitcoin and other cryptocurrencies to obtain block rewards.
Annual Bitcoin mining energy consumption trend chart, unit TWh (Taiwatt hour)
The assets acquired by the miners (block rewards) have value, because the creation of any cryptocurrency requires a large amount of electricity , plus encryption technology to ensure the scarcity of cryptocurrencies , and these assets are approved by each miner. Created by participating in global competition. Each subsequent block dug by the miner will accumulate the security of the previous block and transaction. This proof of workload model is the basis for the security of blockchain networks such as Bitcoin and Ethereum .
Settlement of transactions: finality
By default, participants in the blockchain network recognize the chain with the greatest "difficulty", or the chain with the most blocks, which is the "canonical ledger". Let everyone agree on this "normative ledger", which is the real driving factor behind digital ownership in the blockchain . If a new book is accepted as a truly regulated book tomorrow, and your transaction or cryptocurrency is not recorded, then you will suffer losses and you will not be able to participate in the system because the system no longer recognizes you. "Ownership", although you have a local copy. The above applies to all blockchain protocols based on the longest chain rules (such as current Bitcoin and Ethereum). But the security guarantees for these agreements are not absolute . In these agreements, there is no guarantee that your transaction will never be reversed, nor that a new, longer chain will not appear in the Bitcoin protocol . That is to say, the workload proves that the security concept of the blockchain is probabilistic. The longer you run, the more blocks you generate, and the less likely your trade will be reversed. The longer a workload proof chain (such as Bitcoin) runs, the less likely it is that previous transactions that exist on the chain are reversed . This concept becomes the settlement finality.
Transaction reversal or chain splitting is a larger phenomenon of blockchain bifurcation: in blockchain forks, some participants in the network have different beliefs about which is the “normative ledger”. Bifurcation can have a huge impact on digital ownership because it is a highly social process that can occur for a variety of reasons. In the Ethereum network, in order to upgrade the network and add new features, the network will perform a predetermined fork. Sometimes there is a controversial split, that is, some people who don't agree to make changes to the network protocol will decide to persuade some of the participants in the network to fork out a new chain (for example, bitcoin cash is separated from the bitcoin core chain). A very controversial forked chain).
But forks are not an unusual situation. In fact, due to network conditions, Bitcoin will be forked almost every once in a while . Since not everyone can see the spread of the block at the same time, both miners may create a fully valid block, but in the end only one block will receive a bitcoin agreement.
The blockchain network is not perfect because anyone in the world can run a node: due to various Internet connections and latency issues , blocks usually take longer to propagate in a larger blockchain network. More time is available for potential forks during the time interval between miners agreeing on the block.
The time required for the recent block propagation of the Ethereum network
The blocks that are valid but not included in the books accepted by most people in the network are called orphan blocks, and are also called uncle blocks in the Ethereum network . In the Ethereum network, those miners who created the uncle block will also receive a little reward. The proportion of the created uncle blocks in all the excavated blocks is called the block rate.
The trend of the unblocked block rate in the Ethereum network, in which the Ethereum block rate ushered in the peak at the end of 2017.
The uncle block rate also reflects the network latency and inefficiency in Ethereum at the time . That is to say, if the block uses too much gas (that is, use too much calculation), then these blocks will be larger in size, and it will take longer to propagate to the entire network, which will increase the appearance of more uncles. The probability of the block. At high usage rates, the blockchain network becomes crowded and a large number of unblocks appear at a higher ratio than usual. The possibility of fork and chain reorganization is why exchanges such as Coinbase need you to wait for a while before you can use the coins you receive or transfer your coins out of the exchange . Usually you need to wait for about 30 blocks. A secure timeframe for confirmation, as the exchange will try to ensure that users are less likely to lose ownership of their assets.
Alternatives & corresponding trade-offs
Therefore, in Bitcoin and Ethereum, participants can only increase the likelihood that their transactions will not be reversed over time, but it will never be 100% certain that they will not be reversed . This concept has been incorporated into the blockchain protocol itself, as it relies on the blockchain network to determine which "real" normative book is the one that contains the most blocks and the most workload. Is the blockchain protocol the place where transactions can achieve finality? What are the trade-offs?
A key alternative to the proof of the work of blockchains such as Bitcoin is proof of interest (PoS): PoS is a mechanism by which participants lock in and “pledge” a portion of the cryptographic assets to participate in the consensus of the global ledger . If the participants commit malicious acts, they will lose all or part of the pledged assets, creating a punishment-based mechanism . Ethereum has always wanted to switch to a proof of equity mechanism, and work on the next iteration of the Ethereum agreement is going on smoothly.
A protocol based on a proof of equity mechanism uses a variant rule of the “longest chain decision rule”, since it is not necessary to consume electricity to create a longer chain, so when the transaction can be considered “deterministic” There is no encryption guarantee; the way the equity certification protocol is chosen is that after the X blocks are generated, the transaction can never be reversed, and everyone acts according to the rules of the agreement .
This also means that in the equity certification agreement, before each deterministic time comes (ie, before X blocks are generated), people have no incentive to maintain or store the entire transaction record, which is a major compromise in this way. Where . In the workload proof bitcoin, the newly joined nodes in the network will download and verify the entire ledger from the first block, effectively achieving the same "truth" as other participants.
How does the equity certification system achieve the certainty of the transaction?
Equity certification mechanisms (such as Ethereum's Casper FFG) rely on mortgage-weighted voting by a set of verifiers to determine when to finalize a particular block series on the main chain . That is to say, the nodes in the network have a built-in protocol. If certain conditions are met, the protocol will ignore these blocks before the time when the main chain reaches consensus. Typically, the threshold for this vote is in accordance with Byzantine Fault Tolerance (BFT), ensuring that at least 2/3 of the verifiers voted at a specific time as a security measure.
There are "finality checkpoints" in the equity-based model . After the network has been running for a long time, the newly added nodes only need to verify the status of the books from the recently verified checkpoint. There is no need to start verification from the first checkpoint. That is to say, if the equity certification agreement stipulates that every 1,000 blocks are generated (each of which has obtained enough votes), a checkpoint is set, and the transactions in these blocks can no longer be reversed, then The new node only needs to accept the "truth" of the ledger from this checkpoint. There is no need to pay attention to the other blocks before . In this case, verification of the global state becomes subjective and objective. In fact, Vitalik Buterin refers to this property of proof of equity as weak subjectivity , as shown in the following figure:
What does this mean for ordinary users?
For ordinary users interacting with the blockchain, the assets on the blockchain are just records on the ledger, similar to how the ownership of the legal currency assets currently stored in the bank operate . For the legal currency assets stored in the bank, your ownership of your funds exists because there is proof of your balance in the bank's centralized database. In the blockchain, users have ownership of their own cryptographic assets, simply because most people in the agreement recognize that ownership is part of the "normative ledger." If the chain is attacked tomorrow and deep block reorganization occurs, your transaction is excluded from the "regulated book", then your private key and wallet are useless. Even if you "own" your encrypted assets, most people in the agreement do not recognize them. The digital ownership risk on the blockchain is proportional to the security flaws of the underlying protocol. The greater the security risk of the protocol, the greater the risk of digital ownership.
Author | Raul Jordan
Compile | Jhonny
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