A blockchain is a distributed ledger in which a record of transactions made in Bitcoin, or another cryptocurrency is maintained across several computers that are linked in a peer-to-peer network. The Blockchain ledger is immutable, decentralized, digitized, secure, traceable, and scalable and generates a great sense of trust by incorporating a consensus algorithm. Proof of Weight is a blockchain-based consensus mechanism that gives users a weight based on how much cryptocurrency they are holding. Currently, there are many consensus mechanisms in use but, the most popular of these is Proof of Work (PoW) and Proof of Stake (PoS) mechanisms.
Proof-of-work and proof-of-stake variations remain the most widely used mechanisms for reaching consensus but come with some limitations. Proof of Stake gives an unfair advantage to the rich nodes as more the coins they own more they can earn while Proof of Work consumes a lot of electricity and requires a complex hardware setup. As a result, Proof of Weight has been introduced recently and is different from the Proof of Work and Proof of Stake mechanism.
What is Proof of Weight (PoW)?
Proof of Weight was launched in 2017 as a consensus algorithm on the Filecoin blockchain platform and is a large upgradation of the Proof of Stake mechanism which aims to remove the biased nature of PoS.
- The Proof of Weight is not a single consensus algorithm. Instead, it is an umbrella term for an entire array of consensus algorithms largely based on the Algorand consensus model developed by researchers at the MIT Computer Science and Artificial Intelligence Laboratory where Algorand is a protocol that confirms transactions very quickly.
- The Proof-of-Weight considers some other factors than owning more tokens like in PoS and these factors are known as ‘weighted factors’ which play an integral role in reaching consensus without the risk of any fork.
Why is Proof of Weight Required?
The general idea is that where in Proof of Stake, your percentage of tokens owned in the network represents your probability of “discovering” the next block and this gives an unfair advantage to the nodes having a large number of tokens in terms of more control over the blockchain network and more mining rights.
To counter this many consensus mechanisms have been introduced, Proof of Weight is one such consensus mechanism that considers a relatively weighted value that makes fairer decisions and gives a completely different value than proof of stake value.
How Does Proof of Weight (PoW) Work?
- Every node is assigned a certain “weight” that represents a user’s contribution to the network, this method also protects the network from double-spend attacks and ensures the network remains secure as long as the majority (more than two-thirds) of the weighted fraction are honest users.
- The weighted factors not only measure the number of tokens owned by the node but also other factors like Spacetime, reputation, and any other measurable metric.
- For example, in a file storage project, the metric would be the amount of IPFS (file) data users are storing.
- Each time a transaction is made on a blockchain the network creates a committee of random network members and assigns each member their ‘weight’ using the Proof-of-Weight consensus mechanism which slightly centralizes the consensus process within the random committee.
Proof of Stake (PoS) vs Proof of Weight (PoW)
Even though the proof-of-weight seems very similar to the proof-of-stake consensus algorithm, we can notice a key difference when we take a more detailed look.
- In a proof-of-stake network, the number of coins held in the node’s account wallet determines the “weight” of the user and further the ability of the user to mine a block and receive the block reward. Whereas, in a Proof-of-Weight consensus mechanism the weight of the node not just depends on the number of coins held but on any measurable metric thus Proof-of-weight generates a completely different weighted value.
- For example, Chia uses Proof-of-space and proofs of time as the weighted value to achieve consensus and Filecoin uses Proof-of-Spacetime as the weighted value based on how much IPFS data you’re storing to achieve consensus.
Benefits of Proof of Weight (PoW)
- Scalability: The major advantage of the proof-of-weight consensus mechanism is that it is highly customizable, and it is capable to scale it to a great number of users. The Proof of Weight system enables the creation of committees that consists of random network users who are assigned ‘weights’ according to the consensus protocol.
- Security: Proof of Weight (PoW) also provides some level of centralization which maintains a secure and overall decentralized network.
- Risk of Fork: The proof of Weight (PoW) mechanism strives to achieve consensus without any risk of a new fork as it considers relatively weighted value based on any weighted factors rather than just coins held by the node.
- Less resource intensive and highly scalable: Proof of Weight (PoW) provides a great solution to reach consensus without being resource-intensive or requiring complex mechanisms. It allows the network to reach consensus more quickly thus allowing faster processing of transactions.
Limitations of Proof of Weight (PoW)
- Not economically friendly: Despite the Proof-of-Weight mechanism having a lot of advantages, Proof-of-weight is not designed to generate passive revenue streams as it is very challenging to attract users towards this model.
- Popularity: Secondly keeping the users incentivized to participate in such networks is very difficult, as they don’t earn rewards. Therefore, it is not that popular or preferred model by the blockchain community to achieve consensus.
Conclusion
The whole idea of blockchain technology is decentralization and it is the consensus mechanisms that help in achieving this. The proof of Weight mechanism is one such consensus algorithm that aims at fair common agreement beneficial to all nodes in the network. There is no single consensus algorithm that is perfect, and there is constant change and development in consensus mechanisms to accommodate new requirements and reduce previous loopholes. Therefore, it is very important to choose the consensus algorithm for a blockchain network based on the business requirements.