Beyond its use in cryptocurrencies, blockchain technology has evolved and is now used to power brand-new software applications. The market is currently populated by a multitude of cryptocurrencies. Each one has a unique consensus algorithm that has pros and cons of its own.
The Proof of History algorithm or POH is one of the most well-liked methods for increasing transaction throughput. In 2017 Anatoly Yakovenko created Proof of History (PoH) which enables the Solana blockchain to conduct transactions far more quickly and affordably than some of its major competitors.
The importance of Proof of History for the blockchain ecosystem is discussed in this article along with a brief introduction to it.
Proof of History at a Glimpse
A blockchain network called Solana has unveiled Proof of History (PoH) as its new consensus method. On the Solana blockchain, PoH is a cryptographic method that provides quick and secure transaction validation.
PoH is a blockchain protocol that generates distinctive and verifiable hashes using a verified delay function. In the blockchain, transactions can be time stamped and ordered using these hashes.
Verifiable delay functions (VDFs) are mathematical functions whose computation takes some time but whose results may be promptly checked. It is developed with built-in security mechanisms to guard against cyberattacks and other types of malicious behavior, making it extremely efficient and scalable.
How does the Proof of History function?
When a block is formed in Proof of History at a specific time, the time stamp is generated. In essence, PoH produces a historical record to demonstrate that an event actually occurred at a particular period.
The SHA256 hash functions are used to hash each event and transaction on the Solana blockchain. Input for the following hash is taken from the output of a transaction by Solana. Now, the hashed output includes the order of transactions.
The extended chain of transactions produced by hashing can be verified by anyone. The validity checkers can quickly determine how much time has passed thanks to this characteristic. Moreover, hashing takes a fixed amount of time to complete, making it simple for anyone to assess the network’s speed.
Benefits of PoH
Proof of History provides several benefits including:
Scalability and Low Transaction fees
With a combination of parallel processing and data sharding, PoH manages a high number of transactions without slowing down the network, letting Solana perform thousands of transactions per second.
As Solana can be scaled up and down more easily than other blockchain platforms, this may be advantageous for other currencies like Bitgert. But, a variety of elements other than the technical proficiency of the underlying blockchain platform can have an impact on the Bitgert price or any other cryptocurrency.
PoH uses less processing power and can be viewed as more energy-efficient than PoW, which necessitates miners to carry out difficult mathematical calculations in order to validate transactions.
Since PoH allows every node to take part in the consensus process regardless of computer capacity or stake, it is more equitable than other consensus techniques.
In addition, via decentralized exchanges built on the Solana blockchain, Solana can also be traded for other cryptocurrencies like Ethereum. The dynamics of supply and demand on these DEXs dictate the ETH price, which means it may fluctuate.
The PoH protocol facilitates fast transaction processing. The timestamping procedure can be performed outside of the blockchain network, freeing up the blockchain to concentrate on processing transactions and keeping the ledger.
PoH offers an attack-resistant, decentralized consensus process that is protected from malevolent actors. In order to avoid forks and preserve transparency, the network timestamps all transactions.
Proof of History (PoH) VS Proof of Stake (PoS) and Proof of Work (PoW)
Since they sprang from the same foundation, the Proof of Stake and Proof of History algorithms are quite similar. Yet, there is a big variation in how time is estimated between these two approaches.
Proof of Stake uses the timestamp function. The timestamp of the network is therefore used by each node. It will take longer for each node to verify a transaction since time must first pass through the network.
A Proof-of-Work (PoW) scenario rewards the first miner to successfully analyze the appropriate nonce. Finding this nonce demands a lot of computing power.
The Verifiable Delay Function, which determines time by referring to past events, is used in the Proof of History protocol, which eliminates the need for timestamping services. A hash function that anybody can verify can be created by examining these occurrences.
On A Final Note
Market performance and potential for Proof of History are excellent. It has several advantages over conventional strategies like Proof of Work or Proof of Stake.
The quality standards for layer 1 blockchain networks could change thanks to this novel consensus process. Especially when it comes to financial transactions, the growing demand for blockchain-based applications compels networks to deliver better throughput performance.