A blockchain developer, Input Output Hong Kong (IOHK), has entered the Bitcoin 2.0 sweepstakes with a protocol designed to support a blockchain capable of handling more transactions.
The company’s proof-of-stake Ouroboros protocol is a consensus algorithm designed to improve user governance, system maintenance, transaction processing speeds and blockchain scalability.
IOHK’s chief scientist, Professor Aggelos Kiayias, chair in cyber security and privacy at the University of Edinburgh, authored a white paper on the protocol.
Charles Hoskinson, IOHK CEO and co-founder, said bitcoin’s proof-of-work algorithm is energy intensive, rewards only a small set of actors who are becoming increasingly more centralized, and can process few transactions compared to Visa and PayPal.
“It also takes miners – despite their state of the art equipment, access to electricity, and cooling – increasingly longer to verify bitcoin transactions as the number of traders and investors rises,” said Hoskinson, who is also one of Ethereum’s founders.
“We wanted to develop a more efficient algorithm that saved energy, performed better, and connects the stakeholders of the system – the people who own the cryptocurrency – directly to the consensus of the system,” said Hoskinson. “This connection can go beyond cryptocurrencies to voting, consensus about making upgrades to the network, and also decentralized funding of projects. None of those applications are possible with proof-of-work.”
Hoskinson and Jeremy Wood, IOHK co-founder and chief strategy officer, built Ouroboros assisted by a team of developers, cryptographers, academics and blockchain experts from more than 10 countries.
The team expects to draw interest from companies, traders and alternative asset investors seeking the next-generation cryptocurrency and blockchain.
Kiayias said Ouroboros is more efficient than proof-of-work based blockchains, without sacrificing the decentralization and security features in systems like bitcoin.
Proof-of-stake requires less computing power to run a blockchain protocol, Kiayias said, which can be a major benefit since the costs of running proof-of-work based protocols can be substantial.
“The research behind Ouroboros builds on solid secure systems design principles and makes significant steps forward in our understanding of these systems,” he said. “We see this innovation as forming part of the backbone that will run the world’s financial and business systems of tomorrow.”
Also read: Bitcoin 2.0: fantasy or inevitability?
IOHK invests in cryptographic academic research to develop cutting-edge solutions. The company has resources and academic connections in Europe, America and Asia.
“We are proud to have built a focused network of academics and engineers to rigorously build proof-of-stake from a secure foundation,” Hoskinson said.
“The advantage of this approach is that we gain a much better sense of where and how our protocol can be used, its shortcomings, and what technology it can work with,” he said. “This approach gives our customers more confidence in the systems that use Ouroboros, ensuring their blockchain is secure and fully robust.”
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Last modified: March 4, 2021 4:54 PM