Obelisk Consensus Algorithm

What Is the Obelisk Consensus Algorithm?

Obelisk is a blockchain consensus algorithm used by the Skycoin ecosystem, designed to eliminate the shortcomings of proof-of-work (PoW) and proof-of-stake (PoS) algorithms. According to its creators, Obelisk also reduces the need for mining, significantly improves transaction speed, and delivers enhanced security.

Understanding the Obelisk Consensus Algorithm

Blockchains operate globally as self-regulated, decentralized platforms without any single authority. Therefore, a real-time, reliable, and secure network mechanism is required to ensure the authenticity of the transactions occurring on the network and reach a consensus about the ledger's status. This task is performed by the consensus algorithm.

While the PoW and PoS systems are the two most commonly used consensus algorithms, they both have some drawbacks. For example, PoW is very energy-intensive, and PoS can promote cryptocurrency hoarding instead of spending.

Obelisk's Consensus Process

Obelisk attempts to circumvent the problems of PoW and PoS by distributing influence over the network, according to a concept called a “web-of-trust.” This concept uses various network nodes and makes consensus decisions depending upon the influence score each node creates.

In terms of roles and activities performed, there are two types of nodes that participate in Obelisk: block-generating nodes and consensus nodes. Nodes can take either role because they are interchangeable. Block-generating nodes collect new transactions, authenticate them, package the verified transactions in a new block, and broadcast the block to the network.

Consensus nodes collect the blocks generated by block-generating nodes and put them in a separate container (apart from the blockchain). It then identifies the block made by the largest number of block-generators. This block is called the local winner and qualifies to be added to the blockchain. Each consensus node maintains necessary statistics on local winners (as reported by other nodes).

When local winners have been reported by the majority of the consensus nodes, it qualifies as a global winner and remains a part of the blockchain. However, if nodes decide otherwise, then one of the following actions occurs based on the available data and local logs:

• The nodes re-synchronize with the network
• The nodes drop from participating in consensus or block-making
• The nodes keep their blockchains and request an emergency stop

How Is Obelisk Used?

Obelisk is used by the Skycoin ecosystem. Skycoin is designed and advertised as an alternative to centralized internet control. The intent behind the project is for consumers to control the internet by purchasing or building Skyminer machines to run Skywire—the Internet Service Provider (ISP) alternative—from their homes.

The Skywire network built upon the Skycoin ecosystem creates a mesh of internet connectivity, which removes the requirement for an ISP. Skywire users are rewarded in Skycoin and Coin Hours for providing bandwidth to other users.

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