Input Output Hong Kong (IOHK), a blockchain architecture and development start-up, has built a proof-of-stake protocol as it seeks to create a “better” Bitcoin, aka Bitcoin 2.0.

The protocol, called “Ouroboros”, is a consensus algorithm designed to be a foundation for blockchains that “improve” user governance, system maintenance, transaction processing speeds and blockchain scalability. IOHK has been “operating mostly under the radar for the past two years”, and merges academic research with blockchain engineering.

Charles Hoskinson, co-founder and CEO of IOHK, says Bitcoin uses a “proof-of-work algorithm that is extremely energy intensive, rewards only a small set of actors who are becoming increasingly more centralised and can process few transactions compared to systems like Visa and PayPal”.

In an effort led by Hoskinson, one of the founders of Ethereum, and Jeremy Wood, IOHK co-founder and chief strategy officer, Ouroboros was built by a team of developers, cryptographers, academics, and blockchain experts from over ten countries across the world.

The firm’s protocol “connects the stakeholders of the system – the people who own the cryptocurrency – directly to the consensus of the system”. This connection can go beyond cryptocurrencies to voting, consensus about making upgrades to the network and also decentralised funding of projects. None of those applications are possible with proof of work, according to IOHK.

I/O not in error

IOHK was founded in 2015 by Hoskinson and Wood. It calls itself a technology company; an engineering company that builds cryptocurrencies and blockchains for academic institutions, government entities and corporations; and also a research firm with academic connections in Europe, America and Asia.

As you may know, Ouroborous, according to the Encyclopedia Britannica, is an “emblematic serpent of ancient Egypt and Greece represented with its tail in its mouth, continually devouring itself and being reborn from itself” and “expresses the unity of all things, material and spiritual, which never disappear but perpetually change form in an eternal cycle of destruction and re-creation”.