Proof of Transaction – A Revolutionary New Model or Just a Passing Trend?
Recently, a foundation called TAU came out with their initial ongoing whitepaper, where they describe a new consensus algorithm that was designed as the basis of a cryptocurrency platform which promotes transactions, as opposed to holding or staking tendencies for users.
The consensus model is called “Proof of Transaction” and it is designed to provide security, transparency, and immutability by leveraging the transaction history of wallets to create a block. For the test network, the initial block time is set to 60 seconds and it is constantly adapting according to the time it took to “harvest” the last three blocks, similar to how Bitcoin adapts its mining difficulty.
Harvesting is the selected word for block generation, which fits the reality of their blockchain, as all coins are pre-generated in the genesis block. Every address has harvest power, which is calculated by the number of transactions found in the history of individual addresses, and determines the probability of future transactions to produce a new block.
But, you don’t have to be the sole proprietor of the block generation, as this would require you to run a node and the blockchain to support the ecosystem. In fact, the developers have this under consideration and have come up with “club harvesting”. This is a method by which you delegate your power to another wallet address by sending them an empty transaction.
Bitcoin and Ethereum initially started with the same conceptions to become the world’s best transactional currency, but as time passed it became increasingly clear that neither of them can support the transactional volumes that humans generate on a day to day basis. While it is an experiment at this stage, TAU stands to change the facts that we know about cryptocurrency through innovation and cleverly connecting the real value of globally decentralized systems to the practicality of making a transaction.
It is a fresh concept, but if this works we are going to be looking at the possibility of having transactions validate transactions. This will eliminate the need to hold and enable the blockchain to function in a way that is not energy intensive, without significant hardware costs, low monopoly potential for dominating the consensus mechanisms. Monopolies are still on the table, as it seems possible that in this model high-frequency trading entities such as exchanges may be the potential villain looking to abuse the blockchain. They are perfect examples of how transaction history can be abused, because the volume of their trades reaches the sky-high limits. These exchanges could, in theory, generate a club so powerful that it attracts the majority of cryptocurrency users.
On the other hand, this may provide decentralized exchanges with an additional funding method, where they would facilitate all transaction against the TAU, generating currency velocity and positioning themselves for ideal block generation under this consensus mechanism.
What will happen, and will this work? We don’t know, but we want to hear what you think about this development. Will proof of transaction work and provide the world with a much-needed cryptocurrency that will not fold up under the pressure like Bitcoin and Ethereum do? The TAU foundation has a “Debate Bounty” that will reward you if you make the best statement as determined by their Telegram community.
Featured Image via TAUcoin.