Although bitcoin has exhibited a logarithmic rise in popularity during the past few years, the world’s first decentralized currency has also been faced by many challenges. It is inarguable that the long time needed to successfully confirm some transactions and the small transaction throughput are considered the biggest challenges hurdling mass adoption of bitcoin. Lack of incentive at specific steps along the bitcoin protocol has also raised concerns related to selfish mining and transaction withholding.
Solidus is a new cryptocurrency that has been proposed by a group of researchers from MIT to overcome those challenges. According to the white paper published a few days ago, Solidus is a decentralized cryptocurrency that is built using a permissionless Byzantine concensus.
Solidus is based on a core technique that utilizes proof of work PoW for the process of leader election in order to take the Practical Byzanthine Fault Tolerance (PBFT) protocol to a whole new level of permissionless settings. Solidus was also designed to be incentive along all steps of the protocol in a unique way that eliminates selfish mining. Moreover, Solidus will offer short transaction confirmation times, when compared to Bitcoin. Solidus is also coded to promote safety and fairness, while proposing that Byzantine players and the biggest group of rational players all together control no more than %33 of the network’s hash power.
How Solidus Mitigates Selfish Mining :
Along Solidus’ protocol, there are two settings during which miners are rewarded for withholding information. Let’s say that a miner A discovers a puzzle; he/she will gain no rewards from propagating info related to this puzzle to other miners, as this will not only increase competition, but also reduce the miner’s rewards too, since he/she was the first to solve the puzzle. Accordingly, it is for the best interest of miner A to keep info related to transactions across the blockchain to himself/herself, so that he/she can be the only miner rewarded, when he/she successfully solves the puzzle.
Selfish mining takes place on bitcoin’s blockchain when a miner tries to conceal the latest block, in an attempt to earn all the rewards resulting from solving the puzzle. Solidus proposes a solution to this problem via utilizing a “signed propagation chain”. Obviously, miner A has to be incentivized for propagating the puzzle. So, if miner B learns about the puzzle from miner A and miner B succeeds in solving the puzzle, miner A has to be rewarded. This is how Solidus mitigates this problem:
The protocol ensures that miner B cannot deny that he/she learned about the puzzle via the info propagated by miner A. In such situation, it is not sufficient for miner A to sign the puzzle, because miner B can create a Sybil identity, let’s call it miner C, after learning about the puzzle, to sign the puzzle in an attempt to deceivingly claim that he/she learned about it from miner C. Solidus’ protocol is designed to store a chain of signatures, where each and every sender has to be a legitimate recipient from the previous link on the chain. So, according to the example we proposed, any member of the network that discovered the puzzle can be the producer.
Figure showing the structure of Solidus’ blockchain, courtesy of https://arxiv.org/pdf/1612.02916v1.pdf
Bitcoin is designed to counteract an adversary that reaches up to 49% of the network’s hash power. By using PBFT, Solidus is planned to resist an adversary of 33%.
Not only an incentive cryptocurrency, but Solidus also promotes a permissionless Byzantine consensus via modification of the PBFT. The protocol underlying Solidus promotes a scalable cryptocurrency that overcomes the delay in confirmation of transactions across bitcoin’s blockchain. Solidus is secure against various forms of withholding attacks such as selfish mining and can promote almost instant confirmation of transactions. In my opinion, the complexity of the Solidus protocol is the biggest hurdle that can hinder its popularization, but apart from that, the new cryptocurrency has a promising future given the fact that it fixes some of the challenges facing bitcoin.
So, Solidus is another cryptocurrency that has been proposed this month, following Eurakos Next. Both of the new cryptocurrencies are expected to gain great popularity in 2017. Who knows? Let’s wait and see.