Proof of Work is the most widely used consensus method within the blockchain industry and, for better or worse, relies on the economic investment of energy capital translated into hashing power to secure distributed ledgers. While Proof of Work is a highly reliable method of securing a blockchain, it possesses a major flaw: the potential centralization of hashing power.
The issue of hash power centralization is a contentious issue within the blockchain community. The hash power of the Bitcoin blockchain, for example, is driven by a small pool of large mining conglomerates. The centralization of hash power is a potential threat to the fundamentally decentralized nature of blockchain technology, but presents an additional risk that has been proven to dramatically destabilize the crypto-economy — 51% attacks.
What Are 51% Attacks?
51% attacks occur when bad actors control over 51% of the hashing power of any given Proof of Work blockchain, making the subversion of the network possible by allowing the double-spending of tokens. A rise in the availability of cheap hash power for hire has led to an increase in the frequency of 51% attacks. In January 2019, Ethereum fork Ethereum Classic was subject to a 51% attack that resulted in the loss of over $1 million USD.
The January Ethereum Classic 51% attack was the latest in a trend of 51% attacks that have targeted Bitcoin Gold, Verge, and Zencash, resulting in the loss of millions. Crypto51, a popular 51% attack cost calculation platform, demonstrates that a 51% attack against major cryptocurrencies such as Ethereum, Dash, and Litecoin can be executed at astoundingly low costs.
Alternative consensus models such as Proof of Stake offer a potential solution to the issue of 51% attacks, but come with their own flaws — detractors of stake-driven consensus models highlight the possibility of “rich-get-richer” style stake accumulation that could further centralize Proof of Stake blockchains.
A new security protocol, however, holds the potential to solve the 51% problem.
What is Delayed Proof of Work?
Delayed Proof of Work, or dPoW, is a secondary layer of consensus that can be added to the consensus mechanism of any unspent transaction output based blockchain, leveraging the massive hash power of the Bitcoin network to “checkpoint” transactions on the Bitcoin ledger. dPoW is the brainchild of Komodo lead developer James Lee, who posted initial research into dPoW in early 2016.
Put simply, Delayed Proof of Work notarizes block hashes onto the Bitcoin network every ten minutes, using a network of 64 community-elected notary nodes. Each notarization creates a checkpoint that ensures the entire network using dPoW is verified, preventing the creation of unverified chains.
Importantly, dPoW notarizes block hashes to the Bitcoin ledger every ten minutes. In order to execute a successful 51% against a dPoW chain, an attacker would need to fork the chain, mine a sufficient amount of blocks, reintroduce the new chain as the primary chain, and execute a double-spend attack — all within 10 minutes. This makes the successful execution of a 51% attack virtually impossible.
Delayed Proof of Work is integral to the Komodo platform, and was the first commit to Komodo code when the platform was forked from Zcash in late 2016.
Delayed Proof of Work in Action
The dPoW solution has already been demonstrated to successfully prevent 51% attacks. In October 2018, anonymous ethical hacker GeoCold announced that they would livestream a 51% attack on the Einsteinium — one of four platforms outside of the Komodo platform that currently integrate dPoW. After discovering that Einsteinium used dPoW security, however, GeoCold quickly abandoned the planned 51% attack and shifted to another platform.
Einsteinium was eventually subject to 51% attack, however. In February 2019. A failed attack against the network resulted in the creation of over 100 orphan blocks after an attempted re-organization. The Delayed Proof of Work security layer, however, prevented the attack entirely, demonstrating the effectiveness of Komodo’s second layer security solution.
Major blockchain networks such as Ethereum may be planning future shifts to Proof of Stake consensus models, but the Proof of Work model isn’t going anywhere soon and is the most secure consensus model available to new blockchains. The availability of second layer security protocols such as dPoW foster innovation and growth within the blockchain industry by providing smaller-scale blockchains with the ability to leverage the massive hashing power of the Bitcoin network, making 51% attacks harder than ever before.