by Lumai Mubanga
In part 1, we discussed the implications of using generic and public or private design models on blockchain operations. In part two, we will further discuss the implications of using a chosen consensus algorithm on the operations of a blockchain platform.
A Consensus model or what kind of algorithms the blockchain platform is using has direct implications on its performance. There are many consensus models in use today. These include the famous proof of work and proof of stake among others. We will briefly discuss the implications of the former.
Implications of using proof of work PoW
The proof of work (PoW) algorithm requires miners to compute hard and complex mathematical problems. This demands huge energy requirements and hardware resources. The obvious non-technical implication has been that the whole business favours people with huge capital investments. As a result, it appears that the blockchain platform such as bitcoins favours people or organizations with cash as opposed to letting ordinary investors tap into its potential. This goes against or contradicts its permissionless feature, which supports ordinary people to join and participate without a complicated venting process.
No guarantee for those with computational power
On the other hand, the PoW algorithm has also introduced randomness to this problem. Having huge computational power is no guarantee that the miner will solve the problem faster than others will. Thus, miners with lots of computational power cannot take full control of the entire blockchain.
On the sidelines of this is the possibility of fake transactions. These, though, are allowed as transactions on the blockchain. This results in multiple chains; some with the real transactions and some with the fake transactions. However, the majority can rule out the fake transactions basing their decision on the length of the chain. It is believed the longest chain is the correct one.
It takes time for the miners to do the calculation. The resulting implication is that it affects the efficiency of the whole blockchain as well as a waste of resources, or computing resources in order to calculate meaningless math problems.
In the real Bitcoin system, it is recommended for the user to wait a specific amount of time, like, 10 minutes or 20 minutes, until the transactions get stable in the longest blockchain. This is to allow for the confirmation of any given transaction, that it is settled. Otherwise, there is no guarantee a transaction would be put in the blockchain at that moment. Therefore, this waiting takes time until when the chain gets stable. This slows down the performance of the whole blockchain platform.
In conclusion, a blockchain platform, using the Proof of Work as the consensus model or the algorithm, has its performance of the platform negatively affected in terms of delayed transaction processes, resource wastage, unguaranteed resource power advantages and the possibility of fake transactions.