Understanding Solana and Proof-of-History
Solana's Proof-of-History is a Major Breakthrough for Scaling Blockchain Technology
Solana, which has emerged as one of the so-called “Ethereum Killers” in recent months, institutes a Proof-of-History system in order to successfully run their network. While this might seem to be small development on top of Bitcoin’s Proof of Work (PoW) and Ethereum’s Proof-of-Stake (PoS), it actually solves one of the most critical components of any decentralized system - time.
To better understand the implications of Proof-of-History, let’s take a look at what Proof-of-Work and Proof-of-Stake mechanisms currently look like:
Proof-of-Work: In a PoW consensus, miners compete against each other to produce hashes which are then validated by the rest of the miners. The winning miner’s block is added to the chain and he/she is rewarded with some newly issued Bitcoin for their work1.
Proof-of-Stake: In the PoS consensus, miners are replaced by validators, who are responsible for staking their currency in order to earn rewards. The winner is selected at random, although staking a larger portion of the pool is directly correlated with a higher chance of winning. Although PoS sacrifices slightly on security due to this system, it doesn’t require nearly the same amount of energy and is much more environmentally friendly.
Solana develops this further by combining Proof-of-Stake with a Proof-of-History consensus that adds time as a new variable to the network. Each transaction on the Solana network is timestamped and hashed with a SHA256 function that produces a unique output. The output is then used as an input for the next transaction, thus keeping track of the sequence.
An example of this in real life would be a photograph. If you take a photo at your wedding ceremony, you have essentially verified that you got married and the timestamp of when you got married. Alternatively, if you take a photograph with the Christmas tree at Rockefeller Center, you have verified that you were in New York sometime around December 25th after the tree had already been put up.
Similarly, since each transaction on Solana is hashed with a unique timestamp, it provides proof of both the transaction taking place and the time of the transaction. This adds a source of objectivity to the network so that validators can compute the state of the network from the ledger itself. In simple words, validators don’t have the additional responsibility of confirming that the messages arriving into the system were actually created when they claim. This reduces the threshold for validator work in the network, making it much faster than PoW or PoS in terms of transaction speed.
However, with a better consensus system comes some drawbacks as well. Proof-of-History validators require specific hardware requirements, without which they would be excluded from the consensus. This opens up some risks as individuals with significantly faster hardware can issue a Denial of Service attack, albeit for a short and identifiable period of time.
The second drawback comes from the enormous amount of data the blockchain network has to store. Since transaction speeds are incredibly fast, Solana will have to find some form of solution for storing data as it scales into the future.
Despite this, it is undeniable that Solana’s Proof-of-History combined with innovations in Tower BFT and Turbine is a massive breakthrough in our understanding of blockchain scaling. While Solana may not necessarily kill Ethereum, it will definitely stand as a competitor in terms of its ecosystem and dApps built on top of the network.
https://braiins.com/blog/bitcoin-mining-analogy-beginners-guide