DEFINITION of Proof of Elapsed Time (Cryptocurrency)
Proof of elapsed time (POET) is a blockchain network consensus mechanism algorithm that prevents high resource utilization and high energy consumption, and keeps the process more efficient by following a fair lottery system.
BREAKING DOWN Proof of Elapsed Time (Cryptocurrency)
POET is a consensus mechanism algorithm that is often used on the permissioned blockchain networks to decide the mining rights or the block winners on the network. Permissioned blockchain networks are those which require any prospective participant to identify themselves before they are allowed to join. Based on the principle of a fair lottery system where every single node is equally likely to be a winner, the POET mechanism is based on spreading the chances of a winning fairly across the largest possible number of network participants.
The working of the POET algorithm is as follows. Each participating node in the network is required to wait for a randomly chosen time period, and the first one to complete the designated waiting time wins the new block. Each node in the blockchain network generates a random wait time and goes to sleep for that specified duration. The one to wake up first – that is, the one with the shortest wait time – wakes up and commits a new block to the blockchain, broadcasting the necessary information to the whole peer network The same process then repeats for the discovery of the next block.
The POET network consensus mechanism needs to ensure two important factors. First, that the participating nodes genuinely select a time that is indeed random and not a shorter duration chosen purposely by the participants in order to win, and two, the winner has indeed completed the waiting time.
The POET concept was invented during early 2016 by Intel, the famous chip manufacturing giant. It offers a readymade high tech tool to solve the computing problem of "random leader election."
The ingrained mechanism allows applications to execute trusted code in a protected environment, and this ensures that both requirements - for randomly selecting the waiting time for all participating nodes and genuine completion of waiting time by the winning participant - are fulfilled.
Essentially, the workflow is similar to the consensus mechanism followed by Bitcoin's proof of work (POW) algorithm, but without its high power consumption. Instead of being resource intensive, it allows a miner’s processor to sleep and switch to other tasks for the specified time thereby increasing its efficiency.
The mechanism of running trusted code within a secure environment also takes care of many other necessities of the network. It ensures that the trusted code indeed runs within the secure environment and is not alterable by any external participant. It also ensures that the results are verifiable by external participants and entities, thereby enhancing transparency of the network consensus.
POET controls the cost of the consensus process and keeps it nimble so that the cost remains proportional to the value derived from the process, a key requirement for the cryptocurrency economy to continue flourishing.