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Cryptocurrency: Politics of Proof Algorithms

museJun 21, 2018, 7:57:50 PM
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One of the most important aspects of a particular cryptocurrency is its consensus protocol. A consensus protocol is a protocol by which the participants of a network decide how to agree on new information adding to or changing the network in some way. These protocols tend to attract different kinds of people to participate in the network, depending on the ease it is to participate in that network, or the computer hardware needed in order to participate. In order to understand the effects these protocols might have on a society, it's helpful to make parallels to consensus protocols that have been used throughout political history. This way, the study of each will be able to enlighten the other.

First I will look at three common consensus protocols in use today, secondly, I will make comparisons from these to political systems in recent modern history.

Consensus Algorithms
1. Proof of Stake(PoS)
2. Proof of Work(PoW)
3. Proof of Humanity(PoH)
Political Parallels - Outline
1.
Democracy - Landowning
2. Democracy - Universal Suffrage
3. Internet - Identity Verification
4. Internet - Proof of Work
Proof of Work -  The New Proof of Humanity

Consensus Algorithms

1. The Proof of Stake(PoS) consensus protocol requires proof that a participant is a participant of the network, and therefore stands to lose if the network is compromised.

2. The Proof of Work(PoW) consensus protocol requires proof of scarce labor, which is a guarantee that its not possible to participate in a network in a disproportionate manner, because labor is a scarce resource.

3. The Proof of Humanity(PoH) consensus protocol requires proof that you are a human in order for you to participate in the network. The idea is to have even representation between all individuals, regardless of their resources.

Political Parallels - Outline

1. Looking back to the early days of the United States, we can see that voting tended to be restricted to landowners or tax-payers. Those with the most resources were the ones who voted. The reason for this is quite obvious, it's the wealth of the tax-payers that was spent, why should non-taxpayers get to decide how to spend it?  So to which of the consensus algorithms above is this Democracy of Landowners equivalent?

2. Of course, being enlightened individuals who respect people no matter what they own, who believe that everyone is entitled to the wealth of everyone else regardless of how much we have done to earn it, our brave modern society has eschewed the outmoded concept of limited suffrage in primitive democracies. In modern democracies we practice Universal Suffrage. In the concept of Universal Suffrage, every member has the option to participate in the network with equal proportion, regardless of their ability or their possessions. To which of the consensus algorithms above is this Democracy of Universal Suffrage equivalent?

3. In the Internet world, without some form of Proof there is no way to give weighting to real humans above algorithms/bots. The consequence of this is an eternal battle of online spam. The most common method for combating this since the birth of the internet is to require identity verification before one is allowed to post on a website, or before one can pass a spam filter of some kind. This system of identity verification is essentially a Proof of Humanity consensus protocol.

Proof of Humanity is used in Captchas to reduce spam and to "prove" that you are a human. However, this Captcha can be pretty annoying and a new method to replace the need of captchas is now emerging.

4. However, there is a new entrant into the world of online spam filtering. This new entrant follows the lead of blockchain technologies which do not require one to prove their identity to participate in a network, rather, they only require one to do some form of work, and to provide a Proof of Work.

This is already happening, and you can go to this link to see it in action. To follow this link requires a Proof of Work that your computer processor must perform before you are permitted to view a website. If you fulfill the proof of work, you will then be redirected. This "Proof of Work" mines some Monero Cryptocurrency. It's really really small, a fraction of a cent, but if done by thousands of people, it adds up.

This method is Proof of Work and it has the potential to completely replace Proof of Humanity. This new method of preventing spam does not directly block spammers, but makes it impossible for spammers to enter a network without making it worthwhile for the network. If you want to make one hundred different profiles, you can do so, but you will have to give Proof of Work one hundred times.

Proof of Work - The New Proof of Humanity

If you have not picked it up yet, the Democracy of Landowners could be considered either as a Proof of Work or Proof of Stake system, while the Democracy of Universal Suffrage can be considered a proof of Humanity system.

For an expensive resource, the traditional way to prevent spam is to require you to purchase a membership and then verify yourself. Purchasing a membership is PoW, because you need to provide financial payment, and money is just a form of stored Work.

For an inexpensive resource, or where humanity is considered more important than your resources, a system prevents spam by requiring identity verification(PoH). They don't want the same people to sign up multiple times and don't care about your resources, they only want to know if you are human.

The modern internet economy can still use the traditional payment system of verification, that allows you to participate in a network once you have provided a financial payment, yet it also offers a PoW alternative to the PoH often used in cheaper services, or in Democratic voting.

We can see therefore, that the new Proof of Work method of signing up actually can parallel the older form of democracy when only land owners can vote, however, because the proof of work required is usually minimal, it is not likely to restrict users from signing up, rather, it will stop large scale spamming.

The Proof of Humanity is, in the modern world, likely to be favored by the mainstream, because to prove your humanity will likely also mean proving your identity, and this allows more control over you as a person. It may also be claimed that Proof of Humanity is "more democratic". Yet allowing yourself to be identified online is often dangerous, and may not be worth the minor savings that Proof of Humanity might give you over Proof of Work.