An Upgrade to Proof of Stake (PoS) and an Introduction of Block Finality Would Make a 51% Attack Impossible – Founder of Konfidio

ETCs chain got hacked recently with a 51% attack and double spending activity was found. Consensus algorithms play a great role in the security of a particular chain. Who makes the decisions, addition of a block, the solution of cryptographic puzzles etc. are the biggest problems of blockchains. With the attack on ETC, the topic of mining and consensus algorithms has once again floated to the top. Some analysts believe that PoW is flawed in a way that it doesn’t provide blockchains with the security and decentralization that is required, while others believe that PoW is the best algorithm that crypto could have and consensus algorithms aren’t made to be perfect they cater to the needs of blockchains and miners.

Jackson Palmer, the founder of Dogecoin, was of the view that these algorithms are not meant to be flawless, they’re made to output a decision in the least centralized way. He stated,

The problem obviously lies with concentrated hash rates and smaller chains where the 51% attack is simpler. Some analysts are also of the view that the current proofs are centralizing blockchains by giving power to powerful institutions. Proof of stake hands over the decision powers to the ones with more wealth in crypto while PoW relies on real-world wealth implicitly (computing powers). Dr. Mervyn G. Maistry, CEO and founder of Konfidio pointed out the weak point of the proofs talking to BlockPublisher saying,

One major flaw of PoW is that if you are a small chain you are more vulnerable to 51% attacks, but if you are a large chain, ie. Bitcoin, Ethereum then you are protected. Coins that use the same algorithm as chains that already have a large amount of hashrate dedicated to them, such as Ethereum’s Ethash or Bitcoin’s Sha-256 are the most vulnerable to 51% attacks. For example, it would only need a small percentage of the current Ethereum (ETH) hashpower to be pointed to coins such as Metaverse, Expanse and Musicoin for a new 51% attack. A more severe vulnerability is Bitcoin Cash built on Sha-256. Despite its market cap of close to $3Bn it would only take less than 5% of the current hashpower used to mine Bitcoin, in order to implement a 51% attack on its chain.

In the opinion of Dr. Maistry, the solution to the problem is moving from PoW to PoS with block finality. If anything, it solves the energy issue related to Bitcoin mining. According to him,

This probably why people around the globe are so keen for the movement of Ethereum to PoS. According to Mervyn, two projects are currently working on promising PoS consensus algorithms, Polkadot and Cosmos. He also explained the projects as follows,

1) Polkadot a shared security network, meaning that you will build a state machine (blockchain) tailored to your needs and when you decide to become a parachin, you become part of the polkadot network. With doing so you receive the security of your chain from the main polkadot chain. This is important because if you are a smaller chain you are still protected because “miners”, called validators, are allocated to protect and facilitate transactions for your blockchain.

2) Cosmos takes a different approach to Polkadot in that, they are mitigating the need for human intervention to prevent an attack. With cosmos, you as well build a state machine tailored to your needs, but you are on your own to get validators to join your network. The caveat is that you don’t need many validators to secure the network if you are using the cosmos sdk. The sdk has countermeasures in the code to prevent even the creator of the chain acting maliciously.