What Is Proof-of-History (PoH) and How It Works

No matter how much we talk about blockchain and decentralized networks, there's still much more to cover. The cryptocurrency world is continually expanding, and for those of us passionate about play-to-earn crypto games and everything Web3, it's a never-ending fountain of discussion.

Our topic today revolves around the Solana network and Proof-of-History (PoH), a method they use to improve Solana's blockchain. PoH is not a consensus mechanism in itself. You might want to refresh your memory on the types of consensus mechanisms, such as Proof-of-Work and Proof-of-Stake. One involves mining, while the other one revolves around crypto staking. Let's see what PoH is all about.

Proof-of-history algorithm explained

PoH represents a revolutionary method used in the Solana blockchain network to ensure the historical record is accurate and that it can't be tampered with.

Time stamps are created to prove that a block was created at a specific time. The hash function is used to create a unique fingerprint of input data, such as when a transaction occurred. This is then added to a blockchain block and can be validated by the nodes which are currently securing the network. The nodes can compare the previous output with the current input to confirm its validity and accuracy.

The hash function is deterministic, so any data structure changes would also change the fingerprint, making the network nodes discard the entire block. Proof-of-History is used to secure and decentralize the blockchain, guaranteeing that all nodes retain and host identical copies of it. This prevents double-spending.

Cryptographic hash function

The cryptographic hash function is a function that takes a random-size input and returns a fixed-size output. Calculations are simple, but getting hold of the original data might be difficult. With distinct inputs, the same hash is both robust and challenging to replicate, and reversion is not an option because it is a one-way function.

How Solana blockchain uses PoH

Solana is the only blockchain that uses the PoH algorithm. It was employed for the first time in March 2020, along with Proof-of-Stake. Solana uses a number of cutting-edge technologies and methodologies to assist it in achieving its goal of enabling quick, easy, and massively scalable smart contracts and decentralized applications (DApps).

It relies on a consensus mechanism known as "Tower BFT" that enables parallel processing of transactions and improves the scalability by dividing the network into separate processing blocks known as "towers." Each tower has the ability to process a set of Solana's unconfirmed transactions.

Another protocol it uses is Gossip which helps minimize latency by propagating transactions across Solana's entire network.

Combine these technologies with Proof-of-History (PoH), and what you get is a blockchain capable of processing somewhere in the order of 65,000 transactions per second.

Proof-of-Stake versus Proof-of-History (PoH)

All decentralized blockchains use a type of consensus to validate transactions, with the most popular being Proof-of-Work and Proof-of-Stake. Proof-of-History emerged as a solution to improve the efficiency of these consensus mechanisms.

While Proof-of-Stake relies on staking and chooses validators based on the amount of staked tokens, PoH uses a verifiable delay function to validate events and creates a record of historical events that work like internal clocks.

Verifiable delay function

The verifiable delay function requires a specific number of sequential steps for evaluation, producing a unique output that is quickly and publicly verified. The previous output is always used as the next input, periodically recording both the count and current output.

All previous events and transactions on the Solana blockchain are hashed with the SHA256 function, creating the sequence of transactions described above.

This hashing process creates a very long, unbroken chain of hashed transactions. Validators can add these transactions to a block without needing a conventional timestamp. Since hashing takes a particular amount of time to complete, validators can use it as a cryptographic clock or timestamp function that helps with calculating time between transactions.

Benefits and disadvantages of Proof-of-History (PoH)

Solana's Proof-of-History (PoH) brings many benefits to the network. It has better scalability than other networks since it creates a verifiable sequence of transactions, while data storage requirements are minimal.

It's also considered very energy efficient, as it reduces the carbon footprint of PoH-enabled blockchains.

However, Proof-of-History has its limitations, too, such as centralization. The PoH system relies on Proof-of-History generators, external computers that are used to output a PoH sequence. Only one PoH generator is used at a time; hence it represents a single point of failure that leads to a certain level of centralization.

Another downside would be that generating Proof-of-History hashes is computationally intensive, which means running a node is complex and expensive.

Proof-of-History algorithm proves to have huge potential, being faster and more efficient than Proof-of-Work or Proof-of-Stake. It requires less computer power than PoW and significantly improves transaction speeds.

Although it has some drawbacks, like centralization, it looks very promising for crypto investors, as Solana's popularity shows. Only time will tell if PoW becomes the basis for other cryptocurrencies. After all, that is the beauty of blockchain technology. Nothing is set in stone, and new tech is being developed every day to help the industry leap forward. The future has never been so exciting as now, in the Web3 age!


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