Summary

This literature review, split into a five-part series, is focused around the flaws of proof-of-work. Proof-of-work is a validation mechanism used in blockchain technology. Proof-of-work secures the network through requiring processing time by computers to be used as collateral for attempting to validate blocks. This mechanism works as designed, however faces criticism due to its heavy energy usage and its unique socioeconomic incentive system for miners. We will look into these claims, followed by analyzing what types of alternatives exist, what these alternatives solve, and finally dive into what niche has not yet been solved.

The end goal of the proposed research is to create a blockchain technology that can scale with a large user base, handle low latency transactions and handle a very high throughput of transactions. Essentially, attempt to prove a way to handle a MMO video game’s networking requirements.

Table of Contents

Introduction

Misalignment of Interests in Proof-of-Work

Inefficiencies in Proof-of-Work

Alternative Mechanisms in Proof-of-Work

Conclusion

References

[1] Nakamoto, S. (2008). Bitcoin: A peer-to-peer electronic cash system.

[2] Decker, C., & Wattenhofer, R. (2013, September). Information propagation in the bitcoin network. In Peer-to-Peer Computing (P2P), 2013 IEEE Thirteenth International Conference on (pp. 1-10). IEEE.

[3] Bentov, I., Gabizon, A., & Mizrahi, A. (2016, February). Cryptocurrencies without proof of work. In International Conference on Financial Cryptography and Data Security (pp. 142-157). Springer Berlin Heidelberg.

[4] King, S., & Nadal, S. (2012). Ppcoin: Peer-to-peer crypto-currency with proof-of-stake. self-published paper, August, 19.

[5] Vasin, P. (2014). Blackcoin’s proof-of-stake protocol v2.

[6] Bentov, I., Lee, C., Mizrahi, A., & Rosenfeld, M. (2014). Proof of Activity: Extending Bitcoin's Proof of Work via Proof of Stake [Extended Abstract] y. ACM SIGMETRICS Performance Evaluation Review, 42(3), 34-37.

[7] Buterin, V. (2014). A next-generation smart contract and decentralized application platform. white paper.

[8] Kosba, A., Miller, A., Shi, E., Wen, Z., & Papamanthou, C. (2016, May). Hawk: The blockchain model of cryptography and privacy-preserving smart contracts. In Security and Privacy (SP), 2016 IEEE Symposium on (pp. 839-858). IEEE.

[9] Decker, C., & Wattenhofer, R. (2015, August). A fast and scalable payment network with bitcoin duplex micropayment channels. In Symposium on Self-Stabilizing Systems (pp. 3-18). Springer International Publishing.

[10] Kraft, D. (2016). Game Channels for Trustless Off-Chain Interactions in Decentralized Virtual Worlds. Ledger, 1, 84-98.

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