Many blockchains are in use today, primarily for digital cash solutions. This section discusses a selection of blockchain platforms to highlight the technical differences and approaches being used.
Numerous applications of blockchain technologies are primarily oriented around moving currency from one account to another. This section profiles several examples of such blockchain applications.
Bitcoin is a digital cash system that has been previously discussed as the pioneer in using a blockchain. New blocks are created approximately once every 10 minutes using SHA-256 hashing to link them together. It is a proof of work system where mining nodes must find a nonce to include in their block such that the hash of the block is less than some predetermined difficulty value. The difficulty is adjusted up or down to attempt to achieve the 10-minute target for block creation. Early in Bitcoin’s history, individual computers could mine and publish blocks; currently Bitcoin requires specialized hardware, large datacenters, or many individuals working together in a mining pool to win the competition to publish blocks.
With Bitcoin, the paying of transaction fees is technically optional since the mining nodes get most of their funds through the publication of blocks. This fee is designed to be a small fee for each transaction, but it can and has become large due to a substantial backlog of pending transactions. Paying a higher transaction fee can give a transaction a greater priority for getting added to the blockchain. Initially, mining nodes got 50 Bitcoin for each block, and only half of that after a certain number of blocks. For example, the reward for mining a block was 12.5 Bitcoins in July 2016. Per the Bitcoin protocol, this reward will halve every 210,000 blocks (around four years) and will decrease to zero once 21 million Bitcoins have been produced. Bitcoin mining will continue at that point, but the reward will be completely derived from transaction fees.
One last technical note of interest is that each Bitcoin transaction contains code written in a language called Script. This code represents a simple program that specifies the transaction. It contains no loops and is highly restricted with regards to functionality (i.e., it is not Turing complete). Bitcoin transactions today use only a small portion of the available features of Script. In practice, most Bitcoin transactions use one of just a few templates of code for the movement of funds between parties.
Bitcoin Cash (BCC)
In July 2017, approximately 80 to 90 percent of the Bitcoin computing power voted to incorporate Segregated Witness (SegWit, where transactions are split into two segments: transactional data, and signature data), which made it possible to reduce the amount of data being verified in each block. Signature data can account for up to 65 percent of a transaction block, so a change in how signatures are implemented could be useful. When SegWit was activated, it caused a hard fork, and all the mining nodes and users who did not want to change started calling the original Bitcoin blockchain Bitcoin Cash (BCC). Technically, Bitcoin is a fork and Bitcoin Cash is the original blockchain. When the hard fork occurred, people had access to the same amount of coins on Bitcoin and Bitcoin Cash.
Litecoin is inspired by and is very similar to Bitcoin, but aims to provide faster confirmation times. Litecoin has implemented SegWit, splitting transactions into two segments and hiding an increased block size . The “witness” signature is separated from the Merkle tree. Another difference between Bitcoin and Litecoin is Litecoin uses the Scrypt algorithm for hashing instead of SHA-256. The Scrypt algorithm is more difficult to solve than SHA-256 because it uses more memory, which makes development of custom application-specific integrated circuits (ASICs) more difficult. There is a larger maximum number of coins which can be mined (84 million Litecoins). Litecoin is a complement to Bitcoin, with higher transaction volumes, and not designed to replace it .
Ethereum is a blockchain platform focused on providing smart contracts. Smart contracts are programs that exist on the blockchain that can be accessed by Ethereum users. They can both receive and send funds while performing arbitrary computation. A properly designed contract can act as a trusted third party in financial transactions since its code is both public and immutable. Ethereum’s transaction programming language is Turing complete. Mining nodes receive funds through mining and transaction fees.
Ethereum also has a concept called “gas” used to power the transactional computations (and is generally around 1/100,000 of an Ether). Every transaction consumes gas as it executes, and the originator of a particular transaction must pay sufficient gas, or the execution of the transaction aborts. There is a maximum gas limit per smart contract (currently three million gas) to prevent computationally expensive programs from being submitted to the Ethereum mining nodes. This is because all mining nodes must execute the transactions in parallel.
The submission of a transaction to an Ethereum contract causes a program to be run in parallel on the mining nodes’ computers. The resulting state of the contract is stored on the blockchain by the user that publishes the next block.
Ethereum Classic (ETC)
Ethereum Classic was created when Ethereum hard forked after the DAO hack. An attacker had drained approximately $50 million, and the Ethereum Foundation created a hard fork to move the stolen funds back to a state before the attack took place. Users who owned Ethereum before the DAO hard fork had the same amount of Ethereum Classic (ETC) after the fork. The reason it exists is because a number of users of the Ethereum blockchain rejected the fork for philosophical reasons, including the principle that the blockchain cannot be changed, and decided to keep using the unforked Ethereum blockchain. The mining and software is largely the same between Ethereum and Ethereum Classic, with the difference being that Ethereum is a fork and the more popular chain.
Dash is a cryptocurrency built with the objective of providing faster transactions. It uses a “masternode” network and can make transactions within four seconds. Dash uses deterministic ordering for the masternodes by using the hash and proof of work for each block. Interestingly, becoming a masternode requires 1000 Dash collateral, which makes it very expensive (nearly impossible) to control more than 50 percent of the network. The collateral requirement for masternodes seeks to alleviate the problems of untrusted nodes in a peer-to-peer network.
Dash uses a different hashing algorithm than most, x11. This consists of using all 11 SHA-3 contestant algorithms (including BLAKE, JH, Keccak, and Skein), with each hash being submitted to the next algorithm in the chain. The reasoning is that multiple algorithm use makes it harder for an ASIC to be created that targets solving these hashes in hardware.
Ripple is the name of both a cryptocurrency and the payment network on which it is transferred. The goal of Ripple is to build on the approach of Bitcoin and to connect different payment systems together. It has a fixed supply of 100 billion XRP, with half of them designated for circulation. Ripple clients do not need to download the entire blockchain, making it easy for clients to join in seconds. Additionally, there is no mining reward for running a server because each transaction costs a small amount of Ripple, similar to Ethereum gas. Therefore, there are no mining nodes or mining pools; instead, about one-thousandth of a cent from each transaction is destroyed. Ripple is not designed with explicit goals for anonymity, but it does have features providing privacy, such as using proxied gateway payments.
Hyperledger is a group of projects aiming to create enterprise-grade, open-source distributed ledgers. The Hyperledger Project is supported and hosted by the Linux Foundation. Although hosted by the Linux Foundation, each project was developed and contributed by different sources. There are several projects within the Hyperledger Project, each one providing a blockchain platform to solve specific problems.
Learn more about Hyperledger
This is a modular, permissioned blockchain that can run smart contracts (called chaincode). The Fabric blockchain was initially contributed to the Hyperledger Project by Digital Asset and IBM.
Learn more about Hyperledger Fabric
This is a modular distributed ledger using proof of elapsed time as the consensus protocol. In a proof of elapsed time system, every participant requests a “wait time” from a hardware enclave (a trusted and secure feature available on some hardware), which distributes wait times randomly. Whichever participant was awarded the shortest time creates the next block in the chain. The use of Hyperledger Sawtooth is tightly coupled to hardware that supports the hardware enclave feature. Hyperledger Sawtooth was initially contributed by Intel.
Learn more about Hyperledger Sawtooth
This acts as an Identity/Know Your Customer (KYC) service using blockchain technologies, which allows institutions to share data and manage identity. Hyperledger Iroha was initially contributed by Soramitsu, Hitachi, NTT Data, and Colu.
Hyperledger Burrow is a permissioned smart contract-enabled blockchain platform. It accepts Ethereum-based smart contract code. Hyperledger Burrow was originally contributed by Monax and co-sponsored by Intel.
This is an independent identity platform providing provenance for trust transactions and accountability. It supports user-controlled exchanges of verifiable claims about identifying information, as well as revocation models. It supports three important privacy features: Decentralized Identifiers (DIDs), pointers to off-ledger sources so that no personal data is written to the ledger, and zero-knowledge-proofs. The Indy code is being contributed to the Hyperledger Project by the Sovrin Foundation.
MultiChain is an open source blockchain platform that enables anyone to setup, configure, and deploy a private, semi-private, or public blockchain. MultiChain is a fork of Bitcoin, but with many modifications. Users can determine whether there is to be an associated cryptocurrency, as well as the consensus method (round robin or proof of work). In the default configuration, MultiChain is a private, permissioned-based blockchain using round-robin consensus. This means that the first person to set up the blockchain acts as an administrator and initial node; all additional users must direct their MultiChain blockchain clients to this first node, and the administrator must grant them permissions.
MultiChain Streams are a unique feature; they are described as “shared immutable key-value time series databases” which are stored on a blockchain.
Source: National Institute of Standards and Technology, U.S. Department of Commerce (Jan 2018)
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