OBELISK: SKYCOIN’S CONSENSUS ALGORITHM

Satoshi envisioned Bitcoin as a decentralized digital currency. Blockchain networks were intended to democratize finance, eliminating corporate control and spreading power among users.

Those involved with the blockchain will find that most projects are based on the two consensus algorithms Proof of Work (PoW) or Proof of stake (PoS). They are the most widely used consensus algorithms, but they are fraught with loopholes.

Bitcoin and related currencies have become centralized due to their reliance on Proof of Work (PoW) and Proof of Stake (PoS) algorithms, as well as their use of mining to create coins. This centralization defeats the original purpose of digital currencies.
Skycoin blockchain was developed to correct these flaws. The Skycoin blockchain uses a novel consensus algorithm to replace PoW and PoS. It also fixes security problems associated with other blockchain networks and decouples coin creation from the mining process. The result is a fully decentralized cryptocurrency that fulfills Satoshi’s original vision.

THE WEAKNESS OF MODERN CONSENSUS ALGORITHMS

The Bitcoin system is completely based on decentralization. However, there is no protocol mechanism to restrain greed, as most hashing power is concentrated in the hands of few people.
Three or fewer than three mine pools control the Bitcoin network.

The concentration of bitcoin in the hands of few miners gradually turned bitcoin into a centralized system.
The occurrence of this phenomenon with Bitcoin has made it lose the original principle for which it was developed as a virtual currency based on distributed ledgers. Apart from the mining pool monopolized, there is also a lot of energy wasted in the mining process.

The "workload proof" algorithm is easily manipulated by monopoly, so "equity proof" is introduced to reduce this risk. According to the amount of electronic assets, the owner also has certain authority and voting priority for system changes. However, this not only encourages monopoly, but also causes serious financial problems to the large number of currency holders.

With POW, miners are crunching heavy mathematical problems that require a great deal of processing power. It has been estimated that the amount of power that is required in order to mine Bitcoin is so extensive it could be used to power of a number of countries.
In addition the difficulty in mining Bitcoin becomes exponentially harder as more “hash power” and hence extra energy is required to mine a given amount of Bitcoin.

Bitcoin’s biggest problem is not even its massive energy consumption, but that the network is mostly fueled by coal-fired power plants in China. Coal-based electricity is available at very low rates in this country. Even with a conservative emission factor, this results in an extreme carbon footprint for each unique Bitcoin transaction .

PoS do require way less energy than PoW algorithms but there are a number of concerns around centralization. In order to verify transactions a particular node has to have a certain amount of coins. This means that a node that is able to hoard coins could have more power on the network.

A 51% attack means that 51% of the ‘computer processing power’ used to verify transactions is controlled by one entity, and once this number (51%) has been reached, they can create a new ledger (blockchain ‘fork’ basically) so that they can double spend their own coins (among a few other capabilities). So basically, if there was an election and you control 51% of the vote, you decide who gets elected.

In summary, Centralization, 51% attacks, Mining problems, slow transaction speeds, Wasted power are the major problems faced by backward algorithms of first and second-generation cryptocurrencies.

As one of the earliest developers of the Bitcoin system, Synth quickly realized this problem and began to think of a consensus algorithm that could remove mining incentives and fix other vulnerabilities.

Skycoin started from the design, avoiding the fact that the BTC's bookkeeping rights and voting rights are not separated, resulting in the concentration of power in the hands of the mining tyrants. The mining tyrants will fork BTC forced as arbitrarily as they want there manipulating the currency and leading to unstable fluctuations to the detriment of the minority holders of the coin.

Skycoin did not mine directly, cancel the block rewards, and the miners did not have the benefits. There was no incentive to monopolize and control the Skycoin network.
Obelisk designed a trust-based mesh network in which each node randomly connects several upstream nodes and downstream nodes, spreading the influence of the nodes and avoiding BTC centralization.

Obelisk is Skycoin's innovative consensus algorithm, which replaces POW and POS with a web of trust. The new cryptographic and network primitives allow verification of mathematical conditions for unanimous network consensus, both for public and private blockchains. The new network primitives also enable detection of malicious node behaviour. Obelisk was inspired by academic research into adversarial distributed time stamping and algorithms such as Ben-Or's, Paxos, and the Castro-Liskov PBFT algorithm. It is a new solution to the Byzantine Generals problem, which offers strong mathematical security guarantees, even when the majority of nodes are hostile

The consensus mechanism is the core of the skycoin blockchain. It was developed by a team of experts through theoretical discussions, technical research and development, with more than 60 papers to demonstrate, using mathematical arithmetic operations, and only through a large number of practical verification before launching Obelisk.

Skycoin will not encounter the same performance bottleneck as Ethereum, because Skycoin has a dedicated blockchain for each application, while Ethereum puts all data on a blockchain, and Skycoin can reach 3000tps per chain, it also increases processing power by adjusting the block size and adding payment gateways. It is now through a large-scale application and ecological construction to verify this algorithmic mechanism.

HOW DOES SKYCOIN OBELISK WORK?

Obelisk, distributes its influence over the network according to a “web of trust” (WOT). Skyfiber corrects the major security flaws and “centralizing tendencies” associated with blockchain networks in which consensus is based on Proof of Work (i.e. Bitcoin) or Proof of Stake algorithms (i.e. Ethereum).

Each Obelisk node (Skycoin Consensus Node) has a public key (an identity) and personal blockchain (a public broadcast channel).
Consensus decisions and communication happen within the personal blockchains of each Obelisk node.
This is a public record of everything a node does. This allows the community to audit nodes for cheating and collusion.
It gives the community a way to identify nodes, which are participating in attacks on the network and it makes public how decisions in the network are being made and which nodes are influencing those decisions.

Each node has a list of other nodes that it subscribes to.
Nodes with more subscribers are more “trusted” and yield more influence in the network.
If the community does not trust the nodes representing them or feels that power within the network is too concentrated (or not concentrated enough) the community is able to collectively shift the balance of power in the network by collectively changing their trust relationships in the network.

Node subscription relationships can be random and/or can be formed through web of trust (subscribe to nodes of people you know and people in the community you trust).

When a node receives a new block from a chain it is subscribed to, it publishes the hash of the block it publishes.
This is a public acknowledgment of the receipt of the block.
Each block is time stamped and counter-references blocks from other chains.
This creates a dense interlinked chain of block acknowledgments.
These chains establish causal relationships and can act as a distributed time stamping system as described in the next section.
This allows the network to prove that data did not exist or was not published to the network or establish that particular nodes were active or offline during a particular time interval.

The current Obelisk consensus algorithm is based upon Ben‐Or’s randomized consensus algorithm.

A Sybil attack in a random graph (worst case) allows the Sybil nodes to control consensus, but the nodes are unable to revert transactions, removing the only economic incentive to attack the network.
A Sybil attack in computer security is an attack wherein a reputation system is subverted by forging identities in peer-to-peer networks. It is named after the subject of the book Sybil, a case study of a woman diagnosed with dissociative identity disorder

In real world graphs the Sybil resistance of the network is actually very high and running a node is moderately costly in terms of bandwidth, which makes large botnets prohibitive.

Trust relationships are scarce and can be rescinded.
In the event of an attack, the network reacts by severing connections to less trustworthy nodes and contracting to a smaller core of trusted nodes.
The public record left by each node’s personal blockchain makes it very easy to identify the nodes participating in an attack.
As attacking nodes are identified, individuals sever relationships with those nodes, reducing their influence.
Therefore, the major benefits of the Skycoin network are:

-Skycoin consensus is democratic and the community runs nodes
-Skycoin node consensus is public
-Every node is accountable to the community and 3rd party audits
-Influence within the Skycoin consensus system is democratic and transparent (but unequal)

Obelisk is different from both PoW and PoS because it functions based on distributed influence, also known as a “web of trust.”
In this system, each node subscribes to a list of other nodes. The density of a node’s network determines its influence.
Nodes have personal blockchains that broadcast and record all actions publicly.
Because the node’s communications are public and transparent, the community can verify that nodes are operating fairly.

If a node fails to comply with community standards, its actions will be visible in the public record. The network can then sever connections with that node, decreasing its influence over the network.
In this way, our web of trust system weeds out malicious nodes and rebalances power according to the collective will of the community.
The result is a smaller core of trusted nodes that make network decisions through verified relationships.
Each node's behavior is recorded and it is easy to audit malicious behaviour. When the network finds one of the malicious nodes, the node can cut off the connection of the malicious node, and those bad actors will immediately lose their influence on the network. This transparent approach proves that the network is always highly democratic and decentralized.
The Skycoin blockchain lets the community audit nodes and hold them accountable.
This creates a transparent consensus that allows for collective decision-making and true decentralization of power.
By eliminating PoW/PoS issues, Skycoin delivers a digital currency that provides all the benefits of a democratic network.

Obelisk is the key to reinventing blockchain. Its web-of-trust style consensus prevents the development of centralized power. Skycoin requires no mining, so the network is immune to 51% attack. Transactions are significantly faster, occurring in seconds.
Decisions are made through community consensus, not based on the wishes of a few majority stakeholders.
These features make Skycoin the most secure blockchain option available today.

Skycoin's transaction process is closed and will only be performed between the node and its associated upstream and downstream nodes. Like Apple's system, closeness’ ensures high efficiency and a good user experience. If you want to do damage on Skycoin, you must get a user's private key on the transaction chain, and you must join it upstream or downstream. Once added, all subsequent actions will be broadcasted and also limited to this transaction chain, which cannot be spread on a large scale. Someone is guilty of illegal or malicious attacks. The community can easily find the problem node, cut off the connection between the node and other upstream and downstream nodes, and minimize the damage.

The reason why the “trust network” is more secure is because many independent nodes that are difficult to compromise reach its consensus. In addition, Skycoin does not believe that the nodes participating in the consensus are trustworthy, and attempts to independently verify the behaviour of these nodes.

Skycoin gave birth to two revolutionary advances and applied WoT for consensus. One of the uses of immutable data structures is to create a "public broadcast channel", a password source language that simplifies the problem of General Byzantine. The purpose of this use is mainly to ensure that:
A. All the information of each node is transmitted to all other nodes;
B. A node must send the same information to other nodes.

This innovative approach facilitates the node's review of the behaviour on the network (that is, independent verification of compliance with the agreement). In the end, the node may publish a proof of violation of the agreement and automatically shut off the connection with the offending or offensive consensus node without the participation of a third party.

The second innovation is that Skycoin's consensus process has a strict formal mathematical definition. The system can automatically determine whether the node follows the protocol. The node can automatically detect and cut off the connection with the node that generated the attack.

Currently, the easiest way to operate an Obelisk node is to purchase a Skywire Miner or build a DIY version on your own. While running an Obelisk node itself does not produce monetary value, it does keep the Skycoin blockchain safe.

When building a Skyminer, one can choose to contribute resources by operating nodes on the Skywire network and earn Skycoin (SKY) for those resources and bandwidth.

ADVANTAGES OF OBELISK CONSENSUS ALGORITHM

The Obelisk algorithm has many advantages over the Workload Proof and Proof of Entitlement algorithms, which improve the operational efficiency of the entire Skycoin ecosystem. A new consensus algorithm must be widely recognized and used, it needs to meet many requirements, and it can eliminate loopholes in existing algorithms.

The Obelisk consensus algorithm has a powerful mechanism against organized attacks, which makes it highly secure. Under this mechanism, the status of each Skycoin blockchain is uploaded and synchronized in real time, which means that each node in it records the latest blockchain status. Since the entire consensus network is synchronized, once the fictitious digital data appears, it will be retrieved by the network consensus and prohibited from accessing the network.

Obelisk can achieve 100% operational efficiency with very little traffic. Even if some nodes are prohibited from accessing the network due to malicious behaviour, it will not weaken the security and stability of the network. The actions to remove malicious nodes are performed in a semi-automatic manner: if an unknown node or untrusted node sends consensus-related information to a dynamic node (building block node), the dynamic node (block building node) will automatically ignore this information to reduce the consensus network being maliciously destroyed. Risks of.

In order to reach a consensus network with high efficiency, transparency and privacy are very important. The two seem to contradict each other, but they play a complementary role in the consensus process. Transparency requires the node to record and broadcast its activities from time to time, which guarantees the effective development of the consensus network. The degree of privacy requires that each node's IP address be exposed only to the nodes directly connected to it, so that it can effectively monitor the network communication and consensus reached while ensuring privacy.

In terms of its design, the Obelisk is extremely extensible and can save expensive computing power and energy.

This algorithm not only has the advantage of being environment-friendly, but also provides a channel for the participation of low-budget hardware DIY users. The block generation node can also run on low-budget hardware, becoming an alternative to "workload proof." In contrast, because of the reduced costs of construction and operations, it can promote the interconnection of more nodes.

Consensus node and block generation

The correct operation of consensus algorithm cannot be separated from two kinds of nodes: consensus node and block generation node. The block generation node will send data to the consensus node. What does the data contain? The block generation node collects the newly generated transactions and verifies with the transmitted output (UTXO) of the relevant serial number. This information is packaged into new blocks and transmitted to the entire network so that it can be stored publicly and securely.

The work of the consensus node is to collect all the blocks generated by the block generation node and store them in a store that is not linked to its own blockchain. This locked locker can only be unlocked by the block's serial number, which is also one of the fraud prevention mechanisms. A consensus node may collect a large number of blocks at the same time, and then select the blocks generated by the most block generation nodes. Prior to this, all transactions will confirm their legitimacy, so the phenomenon that fraudulent transactions are sent to generating blocks will not occur.

Skycoin Obelisk overcomes the vulnerabilities of existing consensus algorithms and will become the future of consensus algorithms in the blockchain industry.

For more on Obelisk listen to the white paper on soundcloud in the link below

http://audiowhitepaper.io/skycoin-sky-audio-white-paper/

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