Proof of Elapsed Time (PoET) Definition, Purposes, Vs. PoW

What Is Proof of Elapsed Time (PoET)?

Proof of elapsed time (PoET) is a blockchain network consensus mechanism that prevents high resource utilization and energy consumption; it keeps the process more efficient by following a fair lottery system.

The algorithm uses a randomly generated elapsed time to decide mining rights and block winners on a blockchain network. By running a trusted code within a secure environment, the PoET algorithm also enhances transparency by ensuring lottery results are verifiable by external participants.

Understanding Proof of Elapsed Time (PoET)

A consensus mechanism is a method used by blockchain networks to verify transactions and create more blocks. Proof of elapsed time (PoET) is a consensus mechanism often used on permissioned blockchain networks to decide the mining rights or the block winners on the network. Permissioned blockchain networks are types that require any would-be participant to identify themselves before they are allowed to join.

The PoET network consensus mechanism needs to ensure two crucial factors. First, it ensures that the participating nodes genuinely select a time that is indeed random and not a shorter duration chosen purposely by the participants to win. Second, it establishes that the winner has completed the waiting time.

The PoET concept was invented in early 2016 by Intel Corporation (INTC), the 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, ensuring that both requirements—randomly selecting the waiting time for all participating nodes and genuine completion of waiting time by the winning participant—are fulfilled.

In conjunction with other organizations such as the Linux Project and IBM, Intel sponsored the open-source Hyperledger Sawtooth project, which uses the PoET consensus mechanism. Hyperledger Sawtooth is a distributed ledger solution that is both scalable and adaptable for many uses at the enterprise level.

How Does PoET Work?

Based on the principle of a fair lottery system where every node is equally likely to be chosen, the PoET mechanism spreads the chances of winning across the largest possible number of network participants.

Under PoET, each participating node in the network must wait for a randomly chosen period; the first to complete the designated waiting time wins the new block. Each node in the blockchain network generates a random wait time and sleeps 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.

How Is PoET Different from PoW?

Essentially, the workflow is similar to the consensus mechanism followed by Bitcoin's proof of work (PoW) algorithm, but without its high power consumption. It allows a node to sleep and switch to other tasks for the specified time, thereby increasing the network's efficiency.

The mechanism of running trusted code within a secure environment also takes care of many other network necessities. It ensures that the trusted code runs within the secure environment and is not alterable by any participant. It also ensures that the results are verifiable by participants or other permissioned entities, thereby enhancing the transparency of the network consensus.

PoET controls the cost of the consensus process and keeps it nimble so that it remains proportional to the value derived from the process, an essential requirement for the cryptocurrency economy to continue flourishing.

Investing in cryptocurrencies and other Initial Coin Offerings (“ICOs”) is highly risky and speculative, and this article is not a recommendation by Investopedia or the writer to invest in cryptocurrencies or other ICOs. Since each individual's situation is unique, a qualified professional should always be consulted before making any financial decisions. Investopedia makes no representations or warranties as to the accuracy or timeliness of the information contained herein.