Ethical and Inclusive Finance Powered by Block DAG

Blockchain Consensus Protocol

As a blockchain is decentralised by nature, the issue with decentralisation is that all the different parties within the system need to be in unison to avoid certain issues.

This is commonly known as the Byzantine Fault Problem:

“Imagine that there is a group of Byzantine generals and they want to attack a city. They are facing two very distinct problems:

The generals and their armies are very far apart so centralised authority is impossible, which makes coordinated attack very tough.

The city has a huge army and the only way that they can win is if they all attack at once.

In order to make successful coordination the armies on the left of the castle send a messenger to the armies on the right of the castle with a message that says “ATTACK WEDNESDAY.” However, suppose the armies on the right are not prepared for the attack and say, “NO. ATTACK FRIDAY” and send back the messenger through the city back to the armies on the left.”

Before Bitcoin, many peer-to-peer cash systems failed, because they could not achieve consensus.

Bitcoin introduced to Proof-of-Work consensus (PoW), that was pioneered in 2008.

“In Blockchain, this algorithm is used to confirm transactions and produce new blocks to the chain. With PoW, miners compete against each other to complete transactions on the network and get rewarded.

In a network users send each other digital tokens. A decentralised ledgergathers all the transactions into blocks. However, care should be taken to confirm the transactions and arrange blocks.

This responsibility bears on special nodes called miners, and a process is called mining.

The main working principles are a complicated mathematical puzzle and a possibility to easily prove the solution.” — CoinTelegraph

Current Issues with Bitcoin

Bitcoin is governed by a Proof-of-Work consensus, by using a mechanism that involves each operator within the network to sign off a transaction.

Transactions-Per-Second (TPS)—Currently the maximum TPS for Bitcoin is approximately 7 transactions per second. Comparatively, VISA is 24,000 TPS. For a global currency, the issue is that it is not scaleable .

Energy Consumption — As it stands, Bitcoin consumes more power than Switzerland. As we move into a renewable energy economy, large consumptions of energy are not desirable.

Competition Model — operators on the network compete over larger transactions as the mining fee (transaction fee) is larger. The more power and processors an operator has, the more chances they have of fulfilling the transactions they choose too. Since Bitcoin’s genesis, large factories have been created that control a lot of power over the network, going against the ethos of decentralisation.

Qitmeer Consensus Protocol

Building on Proof-of-Work Qitmeer optimises ledger transaction times, through a fully decentralised network. Using Block DAG technology that is rooted in the typical chain structure of Bitcoin.

“In a DAG, individual transactions provide validation for one another. Network users are both miners and validators, although they cannot validate their own transactions. This typically means that in a DAG there is little or no need to pay fees.”

By using this, Qitmeer can adhere to the core principles of Bitcoin, while creating an enterprise level technology that optimises security, openness, fairness and scaleability.

  • Competition Model — Qitmeer promotes a collaborative model instead of the competition model associated with bitcoin as mentioned earlier. This reduces energy cost by up to 90%.
  • Through Block DAG technology, the transactions per second can be increased to factor in applications such as wallets, payment processors and digital currency exchange.

By adhering to Bitcoins’s essence and combining with Block DAG technology, Qitmeer network will provide a solution for ethical and inclusive finance.

Our next article will feature unique aspects of the Qitmeer technology as we go further into detail about the use case aspects and governance of the network, as well as interoperability as a core feature.

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