Ecological Blockchain Consensus
An energy saving blockchain facilitating cooperation instead of competition
Proof-of-Cooperation is the unique consensus algorithm developed for FairCoin. In contrast to other cryptocurrencies FairCoin does not use any mining or minting functionality any more, which are both competitive systems. Block generation is instead performed by collaboratively validated nodes that cooperate to secure the FairCoin blockchain.
In a blockchain value can be transferred without the need of a central authority. Transactions are validated by all participating nodes which follow the same consensus rules and thus maintain the integrity of the blockchain, which is the common and immutable database for all transactions. Two technical methods are widely used to prevent fraud like double-spending:
- Proof-of-Work requires miners to solve a mathematical puzzle. The winner is "mining" Bitcoins. Investors have built big computer farms, that compete for the challenge. Altogether, they consume hundreds of Megawatts electricity.
- Proof-of-Stake asks users to prove ownership of a certain amount of currency. Minting new coins based upon the number of coins, or “stake,” you hold. But Proof-of-Stake may be abused by those who hold enough coins. As there is little cost in trying to cheat, rich nodes could be slowing down the transactions so that the network gets unusable. Therefore Proof-of-Stake is usually combined with Proof-of-Work in a ratio like 5:1, so this method still would require a lot of energy.
Our Proof-of-Cooperation consensus algorithm does not implement any mining or minting functionality, which are only needed for competitive systems. Instead, collaboratively validated nodes (in short CVNs) cooperate to secure the network. Proof-of-Cooperation has been introduced on July 18th 2017, whilst keeping all balances from the old FairCoin blockchain.
With FairCoin, there is no reward for block creation. Therefore, the money supply has been frozen at 53,193,831 FAIR and can not further be changed by creating blocks. A very small transaction fee goes to the respective block creators to compensate their efforts for running a CVN (energy and bandwidth costs). Even if the network of CVNs may grow, the power consumption is negligibly low. CVNs can be run on a Raspberry3 which consumes only a couple of watts.
How does the proof-of-cooperation algorithm work? The consensus rules determine which CVN has to create the next block. Each CVN approves that CVN by digitally signing a piece of data which contains its unique ID. After the respective CVN received all the necessary signatures, it takes pending transactions and forms a new block which is then stored in the immutable and distributed blockchain database.
FairCoin Cooperatively Validated Nodes Monitor
Here you see the CVNs, which decide in a round-robin-manner, which one is creating the next block.