(consensus algorithm, voting)
|automated consent finding by voting|
As mentioned in the blockchain page the problem how to keep a reliable record of past events has been tackled a long time ago. For example, WS uses software that reliable keeps a record of past edits.
The tricky part is: what happens if Alice said on her copy of the blockchain her current balance is 2000 tokens and Bob disagrees and said on his current copy, Alice's balance is only 1000. The new invention is a automated process to mitigate (arbitrate) these conflicts without the need for a central authority, i.e. some sort of democratic voting, called consensus algorithm.
To begin with, there are roughly two kinds of blockchain users: those who have downloaded the whole <100GB file (who own it and therefore can verify it) and those who don't, who vicariously use others peoples' blockchains. Those who do not own the blockchain have no say in the voting process.
Voting requires verification of all the checksums on the chain - and this work is rewarded; either by "finding" new tokens along the way (mining) or by fees - or any combination of these.
There are two basic algorithms in use today (2022: Proof-of-Work and Proof-of-Stake) and some new explored (see below):
Those who do the work (run full nodes, mining) can vote.
Oligarchy. The rich guys decide. Allocate new funds in proportion to existing holdings. (The rich get richer, the poor get poorer)
Unsurprisingly the commercially-controlled media and politicians (the SDS in short) favor Proof of Stake over Proof of Work. In fact Proof of Work is close to being legislated away (i.e European Parliament, China, India) . This typically happens when governments try to impose their own version of a blockchain based money (CBDC).
Parliamentary democracy. Full nodes choose delegates to validate the blockchain. As in a real democracy, network effects tend to compromise the distribution of power:
“Similar to PoS, this trend of the largest being best-placed to receive the most rewards means that the network will trend towards an oligarchy inclined to collude, rather than compete. The largest actors will become richer and strengthen their position as delegates over time. As they earn more rewards, they will hold more tokens. As they hold more tokens, they will have a proportionally higher share of the vote. This means they will then be more likely to be elected, and the cycle repeats, consolidating supply in hands of a narrower and narrower minority.”
Tyranny. A single non-elected entity decrees what is "consent" and what is not. The model of CBDC.
|Blockchain/Consensus||automated consent finding by voting|
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