If you are an ardent follower of Komodo, then you have heard of Adaptive PoW. Adaptive PoW solves an issue with mining seen many times in cryptocurrencies. The pattern in mining is universal for all PoW coins in that many are mined the hardest when difficulty is low. This leads to the issue we will speak of today.
Many coins that use PoW algorithm suffer the same fate. The mining processes are used to confirm cryptocurrency transactions occurring around the world. If you have mined a PoW coin you will have experienced the issue, which brings us to the reason behind this article.
What is PoW?
PoW (Proof of Work) is a protocol designed to prevent cyber-attacks on the network. Making it more costly to make attacks on the network when compared to the gained benefits expected from the attacks.
All previous transactions using a particular cryptocurrency are written in a blockchain. To assure that everything written in a blockchain is right, it requires a decentralized system that confirms the truth about a particular transaction occurring at a specific time.
PoW makes transactions without needing to trust a third party to send or receive money. All you need to do is to verify that the transaction was successful by writing it in the blockchain. This is called the distributed consensus.
When a cryptocurrency transaction completes, all unverified transactions are put in a block. Miners then check this block to confirm their legitimacy. This is done by solving a complex mathematical problem. The first miner to solve the problem is rewarded with coins.
Problems With PoW
Proof of work requires a lot of computing power to solve the complex mathematical equations. The more blocks are mined per time increases the difficulty of mining.
Let’s not bore you with technicals, so how about we paint you a scenario using the mining of gold? Assuming there was a rich guy that can purchase high-powered machinery. Then decides to come to the quarry to mine gold. Keep in mind that the deeper you mine, the harder it is to get more gold.
The individual with the high-powered machinery has arrived to mine. He mines as deep as possible, getting much gold in a short amount of time. When he is finished, he leaves the quarry. The poor miners are left to mine the hard part of the quarry without having the right equipment to do so.
Hence, it might take more time than it used to, getting a little gold, and the miners that cannot get an ROI (Return on investment) will give up. This is how the proof of work protocol works.
The more blocks you mine per time given, the more rewards (coins). This increases the difficulty in mining a particular block. Further requiring more power to solve the complex equations.
As in the scenario above, if a miner starts mining with superior computing power. He mines blocks at 100x the time required to mine a block and leaves. The poor miners that are left require more power to mine subsequent blocks because mining difficulty has risen.
Therefore 1 block that might have taken a minute to mine before the difficulty skyrocketed can take a full day.
JL777 has coined the phrase “difficulty stranded” for this situational haphazard in mining cryptocurremcies.
So, the problem is apparent; any coin that uses an existing hashing algorithm is at the mercy of large miners to not abuse their chain, which may be a 50-50 chance of getting that lucky. Hence, a more decentralized solution is needed to tackle this problem.
What does Adaptive PoW Technology do?
First let me try to explain DAA (difficulty adjustment algorithm) at the highest level, without getting into its technical details. Every blockchain has the desired time between blocks. If the blocks are too fast, the difficulty is increased and vice versa.
It is just a feedback loop that tries to keep the block times constant and works most of the time. However, it breaks down when there is a significant drop in hash rate (the speed at which a computer is completing an operation in the bitcoin code).
Usually, it takes mining hundreds or even thousands of blocks before the feedback adjusts to new hash rate. However, some coins have DAA that adjust every block, but even in this extreme situation, 100x stranding is a problem. For DAA that take about 100 blocks to adjust that is like a full day’s hash rate needed to get 100 blocks and a costly event to whoever has to bail out the chain.
Adaptive PoW technology comes to the rescue; it adjusts the difficulty target within a single block. Adaptive PoW solves the problem of having a difficulty stranded chain that might require miners to mine a single block for over a day to receive a reward.
How does Adaptive PoW Technology Work?
Let’s explain how the Adaptive PoW works. It waits for a long enough time to make backdating a block and future dating a block an unreasonable attack.
You have to make sure that is the case to avoid miners simply backdating a block and then postdating the next one with a much-reduced difficulty.
That would double their mining ROI and make the timestamps for each block going backward and forwards. It also uses the median time of recent blocks, instead of just the previous block time, which helps to reduce the effectiveness of such messing around with block timestamps.
People assume that block timestamps should always be on the increase, but the truth is that it can go backward. However, it is best not to have such chaos and a way for miners to boost revenues with timestamp gains. Adaptive PoW does not activate until after enough time has passed. For instance, the max backdated time plus the maximum future-dated timestamp, with a little of margin added.
Who Created Adaptive PoW Technology?
The brains behind AdaptivePoW technology has opted to stay anonymous for the time being, but we can tell you that he uses the username jl777 on Github. The whole idea of Adaptive PoW technology, implementation, and debugging was carried out in just 1 day by the Komodo team.
Just like the saying that all problems have a solution, sometimes you have to think about it. Well, the problem with proof of work is not an exception to this rule. Although it was looking impossible to solve, it just took a brilliant mind in Komodo one day to solve.
The creation of Adaptive PoW technology is a piece of excellent news for bitcoin miners. At least the concept of a fair game has been returned, and we hope this curbs the constant increase in the power usage by the mining community.