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Unit3 CAT-II
Unit3 CAT-II
The article focuses on discussing the following topics of Byzantine Generals Problem in
Blockchain:
1. What is Byzantine General’s Problem?
2. Money and Byzantine General’s Problem
3. How Bitcoin Solves the Byzantine General’s Problem?
4. Byzantine Fault Tolerance (BFT)
5. Byzantine General’s Problem in a Distributed System
6. Byzantine General’s Problem Example
In 1982, The Byzantine General’s Problem was invented by Leslie Lamport, Robert Shostak,
and Marshall Pease. Byzantine Generals Problem is an impossibility result which means that
the solution to this problem has not been found yet as well as helps us to understand the
importance of blockchain. It is basically a game theory problem that provides a description of
the extent to which decentralized parties experience difficulties in reaching consensus
without any trusted central parties.
The Byzantine army is divided into many battalions in this classic problem called the
Byzantine General’s problem, with each division led by a general.
The generals connect via messenger in order to agree to a joint plan of action in which all
battalions coordinate and attack from all sides in order to achieve success.
It is probable that traitors will try to sabotage their plan by intercepting or changing the
messages.
As a result, the purpose of this challenge is for all of the faithful commanders to reach an
agreement without the imposters tampering with their plans.
Centralized systems do not address the Byzantine Generals problem, which requires that
truth be verified in an explicitly transparent way, yet centralized systems give no
transparency, increasing the likelihood of data corruption.
They forgo transparency in order to attain efficiency easily and prefer to avoid dealing
with the issue entirely.
The fundamental issue of centralized systems, however, is that they are open to
corruption by the central authority, which implies that the data can be manipulated by
anyone who has control of the database itself because the centralized system
concentrates all power on one central decision maker.
Therefore, Bitcoin was invented to make the system of money decentralized using
blockchain to make money verifiable, counterfeit-resistant, trustless, and separate from a
central agency.
Money is one such commodity whose value should be same throughout the society, that is
everyone should agree upon the value of a certain amount of money, despite all the
differences therefore in the initial times, precious metals and rare goods were chosen as
money because their value was seen equally throughout the society, but in some cases such
as precious metals the purity of the metals could not be known for sure or checking the purity
was an extremely tedious task which turned out to be very inefficient for the daily
transactions, therefore it was decided upon to replace gold with a central party which would
be highly trustable chosen by the people in the society to establish and maintain the system
of money. But with time it was later realized that those central parties, how much-ever
qualified were still not completely trustworthy as it was so simple for them to manipulate the
data.
Centralized systems do not address the Byzantine Generals problem, which requires that
truth be verified in an explicitly transparent way, yet centralized systems give no
transparency, increasing the likelihood of data corruption.
They forgo transparency in order to attain efficiency easily and prefer to avoid dealing
with the issue entirely.
The fundamental issue of centralized systems, however, is that they are open to
corruption by the central authority, which implies that the data can be manipulated by
anyone who has control of the database itself because the centralized system
concentrates all power on one central decision maker.
Therefore, Bitcoin was invented to make the system of money decentralized using
blockchain to make money verifiable, counterfeit-resistant, trustless, and separate from a
central agency.
In the Byzantine Generals Problem, the untampered agreement that all the loyal generals
need to agree to is the blockchain. Blockchain is a public, distributed ledger that contains
the records of all transactions. If all users of the Bitcoin network, known as nodes, could
agree on which transactions occurred and in what order, they could verify the ownership and
create a functioning, trustless money system without the need for a centralized authority.
Due to its decentralized nature, blockchain relies heavily on a consensus technique to
validate transactions. It is a peer-to-peer network that offers its users transparency as well as
trust. Its distributed ledger is what sets it apart from other systems. Blockchain technology
can be applied to any system that requires proper verification.
Proof Of Work: The network would have to be provable, counterfeit-resistant, and trust-
free in order to solve the Byzantine General’s Problem. Bitcoin overcame the Byzantine
General’s Problem by employing a Proof-of-Work technique to create a clear, objective
regulation for the blockchain. Proof of work (PoW) is a method of adding fresh blocks of
transactions to the blockchain of a cryptocurrency. In this scenario, the task consists of
creating a hash (a long string of characters) that matches the desired hash for the current
block.
The Byzantine Fault Tolerance was developed as inspiration in order to address the
Byzantine General’s Problem. The Byzantine General’s Problem, a logical thought
experiment where multiple generals must attack a city, is where the idea for BFT originated.
Byzantine Fault Tolerance is one of the core characteristics of developing trustworthy
blockchain rules or features is tolerance.
When two-thirds of the network can agree or reach a consensus and the system still
continues to operate properly, it is said to have BFT.
Blockchain networks’ most popular consensus protocols, such as proof-of-work, proof-of-
stake, and proof-of-authority, all have some BFT characteristics.
In order to create a decentralized network, the BFT is essential.
The consensus method determines the precise network structure. For instance, BFT has a
leader as well as peers who can and cannot validate.
In order to maintain the sequence of the Blockchain SC transactions and the consistency of
the global state through local transaction replay, consensus messages must pass between
the relevant peers.
More inventive approaches to designing BFT systems will be found and put into practice as
more individuals and companies investigate distributed and decentralized systems. Systems
that use BFT are also employed in sectors outside of blockchains, such as nuclear power,
space exploration, and aviation.
In order to address this issue, honest nodes (such as computers or other physical devices)
must be able to establish an agreement in the presence of dishonest nodes.
In the Byzantine agreement issue, an arbitrary processor initializes a single value that
must be agreed upon, and all nonfaulty processes must agree on that value. Every
processor has its own beginning value in the consensus issue, and all nonfaulty
processors must agree on a single common value.
The Byzantine army’s position can be seen in computer networks.
The divisions can be viewed as computer nodes in the network, and the commanders as
programs running a ledger that records transactions and events in the order that they
occur. The ledgers are the same for all systems, and if any of them is changed, the other
ledgers are updated as well if the changes are shown to be true, so all distributed ledgers
should be in agreement.
Purpose of PoW
The purpose of a consensus mechanism is to bring all the nodes in agreement, that is, trust
one another, in an environment where the nodes don’t trust each other.
All the transactions in the new block are then validated and the new block is then added
to the blockchain.
The block will get added to the chain which has the longest block height(see blockchain
forks to understand how multiple chains can exist at a point in time).
Miners(special computers on the network) perform computation work in solving a complex
mathematical problem to add the block to the network, hence named, Proof-of-Work.
With time, the mathematical problem becomes more complex.
Features of PoW
There are mainly two features that have contributed to the wide popularity of this
consensus protocol and they are:
It is hard to find a solution to a mathematical problem.
It is easy to verify the correctness of that solution.
Mining:
The process of verifying the transactions in the block to be added, organizing these
transactions in chronological order in the block, and announcing the newly mined block to
the entire network does not take much energy and time.
The energy-consuming part is solving the ‘hard mathematical problem’ to link the new
block to the last block in the valid blockchain.
When a miner finally finds the right solution, the node broadcasts it to the whole network
at the same time, receiving a cryptocurrency prize (the reward) provided by the PoW
protocol.
Mining reward:
Currently, mining a block in the bitcoin network gives the winning miner 6.25 bitcoins.
The amount of bitcoins won halves every four years. So, the next deduction in the amount
of bitcoin is due at around 2024(with the current rate and growth).
With more miners comes the inevitability of the time it takes to mine the new block getting
shorter.
This means that the new blocks are found faster. In order to consistently find 1 block
every 10 minutes. (That is the amount of time that the bitcoin developers think is
necessary for a steady and diminishing flow of new coins until the maximum number of
21 million is reached (expected some time with the current rate in around 2140)), the
Bitcoin network regularly changes the difficulty level of mining a new block.
Energy-efficient:
As all the nodes are not competing against each other to attach a new block to the blockchain,
energy is saved. Also, no problem has to be solved( as in case of Proof-of-Work system) thus saving
the energy.
Decentralization:
In blockchains like Bitcoin(Proof of Work system to achieve distributed consensus), an extra
incentive of exponential rewards are in place to join a mining pool leading to a more centralized
nature of blockchain. In the case of a Proof-of-Stake based system(like Peercoin), rewards are
proportional(linear) to the amount of stake. So, it provides absolutely no extra edge to join a mining
pool; thus promoting decentralization.
Security:
A person attempting to attack a network will have to own 51% of the stakes(pretty expensive). This
leads to a secure network.
Weakness of a PoS mechanism:
Large stake validators:
If a group of validator candidates combine and own a significant share of total cryptocurrency, they
will have more chances of becoming validators. Increased chances lead to increased selections,
which lead to more and more forging reward earning, which lead to owning a huge currency share.
This can cause the network to become centralized over time.
New technology:
PoS is still relatively new. Research is ongoing to find flaws, fix them and making it viable for a live
network with actual currency transactions.
The ‘Nothing at Stake’ problem:
This problem describes the little to no disadvantage to the nodes in case they support multiple
blockchains in the event of a blockchain split(blockchain forking). In the worst-case scenario, every
fork will lead to multiple blockchains and validators will work and the nodes in the network will
never achieve consensus.
Blockchains using Proof-of-Stake:
Ethereum(Casper update)
Peercoin
Nxt
Variants of Proof-of-Stake:
Regular Proof-of-Stake – The one discussed in this article.
Delegated Proof-of-Stake
Leased Proof-of-Stake
Masternode Proof-of-Stake
Difference between Proof of Work (PoW) and
Proof of Stake (PoS) in blockchain
1. What is Proof of Work (PoW) ?
The term “proof of work” was coined by Markus Jakobsson and Ari Juels during a document published
in 1999.It is related to bitcoin. Proof of Work (PoW) may be a protocol designed to form digital
transactions secure without having to believe a 3rd party. This work builds on previous puzzle solutions.
PoW may be a way of verifying current and past transactions. The work that goes into solving puzzle
generates rewards for whoever solves it called it as mining. In other words, this is often an algorithm
that’s designed to verify transactions and obtain new blocks added to blockchain. With Proof of Work,
miners are competing to be primary to finish a complex mathematical puzzle which will generate this
new block, meaning that they’ll be ready to collect some new Bitcoins as a rewards.
PoW reduces risk of a 51% attack because it’s very hard to do work.
No miner will be able to control bitcoin network single handedly Based on Hashcash PoW system.
The miners need to give a proof that they have done some work, before proposing a new block.
At the same time, each solution is easy for community to verify. This makes it easy to check all
transactions for trustworthiness.
PoW also sets a limit on how many new blocks of data can be generated. For example, miners can
only create a Bitcoin (BTC) block every 10 minutes.
It doesn’t rely on a single third party transactor. This builds a “trustless” and transparent network.
Monopoly can increase over time.
4. Hackers would need to have 51% of Hackers would need to own 51% of
computation power to add malicious all cryptocurrency on network, which
block. is practically impossible.
5. Proof of work systems are less energy Proof of Stake systems are much more
efficient and are less costly but cost and energy efficient than POW
more proven. systems but less proven.