You may have heard of Proof of Work (PoW) and Proof of Stake (PoS), the two most popular algorithms on which blockchains function to earn Crypto. These algorithms are known as consensus mechanisms. Validation of transactions on a blockchain happens based on these consensus rules. Now, Analog has developed a new kind of algorithm known as Proof of Time (PoT). They aim to improve on older mechanisms and create a more efficient blockchain.
How Do Older Algorithms Work?
To understand what proof of time does differently, it is first essential to look at how more popular consensus mechanisms work.
Proof of Work:
This is the oldest consensus mechanism used in a blockchain. Launched with Bitcoin, it was soon adopted by Ethereum 1.0, Litecoin and Monero. Proof of work operates based on computation power expended.
When all miners on the network compete to earn rewards, your chance of success depends on the amount of computing power you use. When you succeed, you are allowed to add a new “block” of transactions to the blockchain. Once the new block is verified, you are rewarded with crypto for the computing power used.
This competition is in the form of advanced cryptographic puzzles which require a lot of energy. Energy is costly, so your incentive is to add new transactions to the blockchain truthfully to be rewarded for your work. If you add a false transaction, it will not be verified and you will not earn any reward.
Proof of Stake:
Instead of using computing power, PoS requires validators to “stake” their crypto as collateral. Validators are then chosen to add a new block to the blockchain, based on the number of tokens staked. If the block is verified correctly, then you earn additional rewards. However, if the validator acts maliciously, then they are punished by deducting tokens from their staked amount.
Proof of stake is a popular alternative to Proof of Work, with Cardano, Solana and Polkadot opting for it. Even Ethereum will soon switch to Proof of Stake in the coming months. It is a more energy-efficient alternative as it does not require a lot of computing power and energy to complete.
Read more: Proof of Work vs Proof of Stake
What Does Proof Of Time Do Differently?
Proof of Time uses a voting system to determine validators. This system prioritises a validator’s active time on the network along with their reputation. It is based on delegated Proof of Stake, which is an altered version of proof of stake.
As stated in the Analog Litepaper, “PoT is a completely decentralized consensus algorithm where any node (user) can join and propose/confirm blocks without being hindered by the hardware or money.” Validation is based on a ranking score on the blockchain and a fixed stake.
Ranking scores are assigned by the algorithm based on historical experience with the validator. This includes the accuracy of past validation and the experience of other validators.
The fixed stake aims to make the staking system fairer for all. It requires all validators on the network to stake an equal amount of $ANLOG tokens, the native token of the platform. Therefore, your chance of validating a node is not based on how much money you stake. It is instead dependent on your accuracy as a validator.
This system also includes a double-check by 1,000 other validators. Once two-thirds of them agree to accept the transaction, it is added to the blockchain.
Advantages of Proof of Time
Proof of time creates an equal system for validation. Unlike Proof of Work, it does not require hardware costing thousands of dollars. Additionally, you don’t have to stake an increasing amount of money to validate blocks. After you stake the initial amount required, all that matters is your performance as a validator.
The reputation system also makes the blockchain safer. Every validator has an incentive for a higher reputation, as your chances of being picked increase. Performing your duty diligently allows you to earn more rewards from the blockchain while also making it more accurate.
Read about: Blockchain vs Cryptocurrency
Disadvantages of Proof of Time
Although the system is fairer, building a reputation may take a lot of time. If you want to jump in and start validating immediately, proof of time may discourage you from doing that by not choosing you as a validator.
Additionally, it is a novel mechanism that is only being used by Analog. If you like the system and want to choose between various blockchains that use it, then there are no alternatives to pick from.
Proof of time is a system that fixes major problems with older consensus mechanisms, at least on paper. The reputation system makes the blockchain safer. It also increases your chance of future rewards if you perform validation accurately. A fixed stake makes the system equal for all, as no one can spend more money to gain more power in the system. We look forward to more projects implementing Proof of Time for fair and equal blockchains.