March 28, 2024

Blockstack Introduces New Proof-of-Transfer Consensus Method for Communicating with Bitcoin Blockchain

The startup Blockstack has developed a new consensus mechanism. Stacks 2.0 blockchain miners will be required to use BTCfor block mining. Then this bitcoin will be transferred to the nodes storing a copy of the registry.

Blockstack introduces a new consensus mechanism that will not only affect the operation of the Stacks blockchain, but will also become a new example of the use of bitcoin.

“We believe Bitcoin is the most secure blockchain in the world. We want it to continue like this,” — said Blockstack CEO Muneeb Ali in an interview with CoinDesk.

Transfer Stacks Blockchainpersonal data between users is designed so that applications can be created without a central data warehouse. Applications can provide directions for finding user data, and these pointers are stored on the Stacks blockchain. To participate in the work of the blockchain, STX tokens are required.

To prevent network attacks, everythingcryptocurrencies require the cost of creating new blocks. Blockstack will now require Stacks miners to buy bitcoins and use them to participate in the network. Thus, according to developers, this will reduce the likelihood of successful attacks on the blockchain.

How it works

The new consensus protocol called proof-of-transfer (PoX) involves two types of participants: miners and stackers.

“PoX can help solve the problem of initiallaunch for new blockchains", — states the White Paper of the Protocol. “Rewards for participation in a separate, potentially more stable, underlying cryptocurrency may be a better incentive to encourage initial participation than offering rewards in a new cryptocurrency.”

Miners create blocks and earn STX tokens inexchange for your BTC — at the rate of 500 STX per block. This BTC will be distributed to stakers, who will hold a copy of the blockchain and will also vote on which version of the chain miners should mine.

Blockstack notes that this approach is differentfrom the proof-of-stake (PoS) method, because participating nodes should not jeopardize their assets, with the exception of possible costs in connection with the blocking of their STX for some set time.

“Proof of translation — this is the structureusing Bitcoin's proof-of-work (PoW) algorithm to launch new blockchains that are tied to Bitcoin's security," — writes Blockstack on its blog. — “In addition, PoX can encourage participants in new blockchains to receive rewards in BTC. Such rewards in Bitcoin were not possible before PoX. These rewards could potentially be used for consensus participation, funding ecosystem developers, incentivizing specific network participants, etc.”

In this case, it will act as a stakernot cheap. According to Ali, participation will require approximately $10,000 in STX, but like other networks with similar systems, users will not need to actually hold that amount of BTC. They can turn to the delegation service that the node maintains in exchange for agreeing to block their portion of the STX in cooperation with the node operator. Tezos implements a similar model for its bakers, and EOS has effectively turned token staking into voting for validators.

At the same time, PoX has its own peculiarity — network participants who lock their own token do not earn STX from this. They earn BTC.

“I think the market and entrepreneurs are starting torealize that Bitcoin — the most powerful computing network in the world, and therefore you can create something new on top of it,” — said Morgan Creek Digital partner Anthony Pompliano.

Benefits for Miners

According to Ali, mining of the Stacks blockchain will bepossible with a normal Internet connection and computer. Miners will simply have to keep track of the STX price and the BTC price in order to assess whether continued participation matches their risk profile.

“In our mining process, miners can simulate the process of creating PoX blocks almost like an exchange,” — Ali said.

This may give some kind of arbitrage advantage at an early stage, but if everything goes well, the difference will decrease as the number of participants increases, he added.

Income opportunities for miners alsowill increase when Blockstack releases its Clarity smart contract language. Once the miners activate it, they will begin to earn commissions on smart contracts. Ali claims that Stacks can be attractive to smart contract developers because they can get extremely accurate estimates of the value of their code.

Blockstack will not participate in mining.The current plan is that once 20 miners have activated the new version of the software, Stacks 2.0 will go live. Miners will continue to make the final decision about making updates to the network.

It was previously assumed that the current version of Stacks, working on top of Bitcoin, will eventually go into its own PoW network. However, with the advent of Stacks 2.0, this was no longer necessary.

Recall that in May 2018, Blockstack announced a decentralized application store, and last September, the startup raised $23 million as part of an SEC-regulated token sale.

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