DEFINITION of Obelisk Consensus Algorithm
Obelisk is a promising consensus algorithm which aims to eliminate the shortcomings of proof of work (POW) and proof of stake (POS) algorithms and makes it possible to maintain the blockchain state across the distributed network with minimal computing power and no need for stake-related requirements. It reduces the need for mining, significantly improves transaction speed, and delivers enhanced security.
BREAKING DOWN Obelisk Consensus Algorithm
Public blockchains operate on a global scale as self-regulated, decentralized platforms without any single authority. A real-time, reliable and secure network mechanism is required to ensure the authenticity of the transactions occurring on the network as well as a consensus on the ledger's status. This all-important activity is performed by the consensus algorithm, which is a network protocol that decides on the contributions by the various blockchain participants.
While proof of work (POW) used by Bitcoin and Litecoin, and proof of stake (POS) used by Dash and NEO, are the two most commonly used consensus algorithms, they both have a few drawbacks. POW is said to be energy-intensive, and POS promotes cryptocurrency hoarding instead of spending.
How Does Obelisk Work?
Obelisk attempts to circumvent the problems of POW and POS by distributing the influence over the network according to a concept called “web of trust.” This concept distributes influence over various network nodes and makes consensus decisions depending upon the influence score of each node. Each node subscribes to a select number of other network nodes, and the density of a node’s subscriber network determines its influence on the network.
In terms of roles and activities performed, there are two types of nodes on Obelisk - block-generating nodes and consensus nodes, and nodes can interchangeably take any roles. Block-generating nodes collect new transactions, authenticate them, package the verified transactions in a new block and then broadcast the block to the network. Consensus nodes collect the blocks generated by block-generating nodes and put them in a separate container, other than the blockchain. It then identifies the block which was made by the largest number of block-generators. This block is called the local winner and qualifies to be added to the blockchain. Each such consensus node maintains necessary statistics on local winners as reported by other nodes. When local winners have been reported by the majority or all of the consensus nodes, it qualifies as a global winner and continues to remain a part of the blockchain. However, if the nodes decide otherwise, then it will take one of the following actions based on the available data and local logs
(1) re-synchronize itself with the network or
(2) drop from participating in consensus and/or block-making or
(3) keep its blockchain and request an emergency stop
Obelisk has the potential of high scalability and low energy consumption. Block generation can be run on low-cost hardware. The algorithm can easily and efficiently run on a sparse network with only nearest-neighbor connectivity, instead of needing high bandwidth connection.
Obelisk is used by SkyCoin, which is emerging as a complete ecosystem of blockchain technology and was introduced to promote the use of cryptocurrency and public ledger technology as a “true” currency, instead of another medium for speculative cryptocurrency bets valuation.