How does dPoW work?
Taking Komodo as one example, the dPoW security mechanism was developed and implemented into the Zcash code base, allowing zero-knowledge privacy and increasing network security by leveraging Bitcoin’s hash rate.
At intervals of ten minutes, the Komodo system takes a snapshot of its own blockchain. Then, the snapshot is written into a block on the Bitcoin network in a process called notarization. Basically, this process creates a backup of the entire Komodo system, which is saved within the Bitcoin blockchain.
Technically speaking, Komodo’s community-elected notary nodes write a block hash from every dPoW-protected blockchain onto the Komodo ledger, by executing a transaction on the Komodo chain. Using the OP_RETURN command, the notary nodes store a single block hash onto the Komodo chain.
The reason why the notary nodes select a block hash that is about ten minutes old is to ensure that the entire network agrees the block is valid. Each blockchain’s network still comes to consensus for each block. The notary nodes simply record a block hash from a previously-mined block.
Then, the notary nodes write a block hash from the Komodo chain onto the Bitcoin ledger. This process is also completed by executing a BTC transaction and using OP_RETURN to write the data into a block on the Bitcoin chain.
Once this notarization to Bitcoin occurs, Komodo’s notary nodes write that block data from the BTC chain back onto the chain of every other protected chain. At this point, the network will not accept any re-organizations that attempt to change a notarized block (or any blocks that were created prior to the most recently-notarized block).
Currently, dPoW is being used with Bitcoin, but it has the potential to be used as a tool for leveraging both the security and the features of any other blockchain that uses a UTXO model.
PoW vs dPoW
One of the main goals of the Proof of Work (PoW) algorithm is to maintain network security, deterring cyber attacks such as Distributed Denial-of-Service attacks (DDoS). In a few words, the PoW algorithm is a piece of data that is very costly to produce but easy for others to verify and that is a crucial element of the mining process.
The mining within PoW-based blockchains is very demanding by design. Miners need to solve a complex cryptographic puzzle in order to be able to mine a new block. Such a process involves intense computational work, which is very costly in terms of hardware and electricity. The process of mining not only protect the network from external attacks but also verifies the legitimacy of transactions and generate new cryptocurrency units (as a reward to the miner that solves the puzzle).
Therefore, one of the reasons Proof of Work blockchains are secure is the fact that the mining process involves a very high financial investment and depends on network consensus. However, it is important to note that the security of PoW blockchains is directly related to the amount of computational power (hash rate) being devoted to them, meaning that small blockchain networks are not as secure as large ones.
In contrast to PoW, dPoW is not used to achieve consensus on new blocks and, thus, is not considered a consensus algorithm. Instead, it is a security mechanism that is implemented in addition to ordinary PoW consensus rules. DPoW makes it impossible for blocks that have been notarized to be reorganized, which means it makes blockchains far more secure and resistant to 51% attacks.
In effect, dPoW “re-sets” a blockchain’s consensus rules every time a block is notarized. For instance, most PoW chains use the “longest chain rule.” So each time a blockchain’s network receives confirmation that block XXX,XX1 has been notarized, the longest chain rule starts over at block XXX,XX2. The network will not accept a chain that begins at block XXX,XX0 or prior, even if it is the longest one.
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