StrongChain: Transparent and Collaborative Proof-of-Work Consensus

TL;DR

StrongChain is a revised proof-of-work consensus protocol that enhances transparency, incentivizes collaboration, and improves security and efficiency in Bitcoin-like cryptocurrencies by utilizing aggregated computing power.

Contribution

It introduces a novel scheme that reflects and leverages the total computing power on the blockchain, addressing Bitcoin's inefficiencies and incentivization issues.

Findings

Enhanced security and efficiency demonstrated through analysis.

Implementation confirms practicality and deployability.

Improved incentives promote collaboration over competition.

Abstract

Bitcoin is the most successful cryptocurrency so far. This is mainly due to its novel consensus algorithm, which is based on proof-of-work combined with a cryptographically-protected data structure and a rewarding scheme that incentivizes nodes to participate. However, despite its unprecedented success Bitcoin suffers from many inefficiencies. For instance, Bitcoin's consensus mechanism has been proved to be incentive-incompatible, its high reward variance causes centralization, and its hardcoded deflation raises questions about its long-term sustainability. In this work, we revise the Bitcoin consensus mechanism by proposing StrongChain, a scheme that introduces transparency and incentivizes participants to collaborate rather than to compete. The core design of our protocol is to reflect and utilize the computing power aggregated on the blockchain which is invisible and "wasted" in Bitcoin today. Introducing relatively easy, although important changes to Bitcoin's design enables us to improve many crucial aspects of Bitcoin-like cryptocurrencies making it more secure, efficient, and profitable for participants. We thoroughly analyze our approach and we present an implementation of StrongChain. The obtained results confirm its efficiency, security, and deployability.