Article written by Ash Bonga
The battle of the consensus protocols has polarized the blockchain community for quite some time now. Time and again, each side has argued the merits of the hardware intensive Proof of Work (PoW) protocol over the lighter Proof of Stake (PoS) and vice-versa. TAU Coin’s new Proof of Transaction protocol seems as though it may not only break the impasse but pave the way to the mass use of cryptocurrency.
Though PoW is the more proven consensus algorithm, it requires sophisticated hardware to solve the complex equations needed to create blocks and support the network, as with Bitcoin’s ASIC mining equipment. The drawback is that PoW presents a barrier of entry as it requires quite a bit of expertise to operate and the equipment costs a pretty penny to come by; this means the network can potentially fall under the control of certain miners. Not to mention the high cost of electricity attached to PoW mining.
PoS, on the other hand, is less power intensive and uses a model where one stakes their own coins to confirm transactions. This may sound ideal, however the risk of whales (users who hold a large number of coins) gaining control of the network by merely holding the tokens instead of transacting with them. Seeing as the more coins one has, the more voting power they hold, it would be in their best interest not to transact.
The above-mentioned drawbacks, negatively affect the decentralized nature of cryptocurrency and keep them in the realm of price speculation as opposed to promoting day to day use in the trade of goods and services.
Enter Proof of Transaction
The PoW and PoS protocols tend to leave too much space for human selfishness and allow for users potentially gaining an unfair advantage by hoarding coins or accumulating hardware. The TAU Foundation’s new Proof of Transaction (PoT) consensus mechanism is intended to be drive mass user participation by enabling users to maintain the network by merely transacting.
TAU’s PoT protocol is aimed at positioning the currency as the go-to transactional coin, improving on the weaknesses of the rival; Bitcoin. TAU’s creator, David Wu, otherwise known as iMorpheus, expressed his vision for the PoT powered cryptocurrency by stating he would like to see it become “The cryptocurrency for the world.”
“A pervasive circulating currency without inflation is the ultimate tool for people to enjoy the abundance of the planet. A cryptocurrency that can resist pressure from G20 governments is potentially possible with the maturity of the internet, and mobile knowledge.” Stated Wu, “POW and POS are two experiments ending in over-concentration on off-chain hardware and coin hoarding. TAU is a new experiment using massive users’ daily economical behavior and transactions to protect network security and grow the blockchain.” He went on to say.
How It Works
The PoT consensus mechanism is designed similarly to NXT where a randomly generated number, determines which “Harvest Club” or group of miners, will produce the next block, relating to the group’s Harvest Power (Club’s accumulated number of transactions). To prevent users from filling blocks with meaningless transactions between themselves in order to collect the block reward, as PoW miners usually do, TAU’s PoT algorithm currently sets the reward window at a year in an attempt to make it harder to predict block reward.
To remain as low-inflation as possible, TAU harvesters will earn transaction fees as opposed to earning tokens slowly trickled into the ecosystem over time.
Scalability is usually one of the most contentious issues in the blockchain sphere, and TAU has made provision for future growth. Though blocks are currently 1 megabyte in size, TAU plans to implement an automatic block size mechanism which will allow Harvest Clubs to determine their own block sizes according to their available bandwidth. TAU could process a minimum of 5,760,000 transactions over a 24 hour period.
Another of TAU Coin’s scaling innovations is their solution to delays in confirmation time resulting from networking congestion. This involves a two-step process where a selected node signs and verifies transactions (The Confirmation Step), then a second node compiles all the signed transactions and signs the whole block (The Block Generation Step). Larger transactions may take longer to confirm than smaller ones, however.
Economy & Distribution
10 billion TAU were generated on TAU Coin’s genesis block on August 1st when the network’s testnet went live. The coins will be distributed over a year-long ICO (beginning on October 15th, 2018) similar to EOS.IO’s wildly successful coin offering, to distribute TAU tokens to as many people as possible.
74% of TAU tokens will be distributed to users over the ICO period, while 18% will be retained by the TAU Coin Foundation to fund the development, maintenance, and promotion of TAU and the remaining 8% will be allocated to their comprehensive bounty programme.
TAU introduces a whole new consensus algorithm to the blockchain. Its PoT mechanism coupled with low transaction fees may see TAU turn out to be everything Bitcoin failed to become, a day-to-day means of exchanging value. Founder, David Wu, himself admits that the project is venturing into uncharted territory, “TAU is working on the new consensus, Proof of Transaction, which has never been built at main-net scale,” and if successful, could set a new industry paradigm.