Page 80 - FIGI: Security Aspects of Distributed Ledger Technologies

392 Hashing is generating a value or values from a string of text using a mathematical function, enabling security during
the process of message transmission when the message is intended for a particular recipient only. A formula generates
the hash, which helps to protect the security of the transmission against tampering. From Techopedia (2019) Hashing,
available at http:// bit .ly/ 2SmSq3i
393 Which may be payable in unused currency held in reserve by the system in additional to optional user fees.
394 As of April 2019, it would require an investment of at least USD 300,000 to rent equipment to potentially have 51%
computational power of the entire Bitcoin network.
395 Tayo, A (2017) Proof of work, or proof of waste?, available at https:// bit .ly/ 2ur4k0R
396 Acquiring sufficient computational or ‘hashing power’ needed to take majority (51%) control over the network could be
prohibitive in a large blockchain system and easily observable by others monitoring the network. Hashing power is the

power that a computer uses to run and solve different ‘hashing’ algorithms. These algorithms are used for generating
new blocks on a blockchain. NiceHash (2019) What is hashing power and why would anyone buy it?, available at http://
bit .ly/ 2SplOWI; and Cryptoline (2019) Peercoin uses a combination of POW and POS. See Peercoin: A coin combining
both POW with POS algorithms, available at https:// www .cryptolinenews .com/ top -crypto -currencies/ peercoin/
397 Some POS variants deal with this issue by requiring an actual stake of currency to be deposited. The ability of a
stakeholder to ‘forge’ or ‘mint’ a new transaction block to the blockchain is the result of pseudo-random assignment
which is based on the size of the stake and the POS algorithm. DLTs using POS include Peercoin, Nxt, Blackcoin,
Shadowcoin, Cardano, Novacoin and soon Ethereum’s Caspar.. Caspar currently consists of two variants which
ultimately will become one finalized version for the update. Oliver, D (2018) Beginner’s Guide to Ethereum Casper
Hardfork: What You Need to Know, available at http:// bit .ly/ 2LWQrBH; and Martinez, J (2018) Understanding Proof of
Stake: The Nothing at Stake Theory, available at http:// bit .ly/ 2O4YVZW; and Peercoin (2018) POS reward, coin age and
minting time, available at http:// bit .ly/ 30IfxII; Novacoin uses a hybrid POW and POS. See http:// bit .ly/ 2xWnAFu
398 Sharma, A (2018) Understanding Proof of Stake through it’s Flaws. Part 2 — ‘Nothing’s at Stake’, available at http:// bit
.ly/ 2SncBhE
399 POS mechanisms vary. Systems add and factor into the computation different weighting measures in an attempt at
best measuring the honesty of a forger based upon objective qualifications which identify signs of trust. One example
is Peercoin which factors in ‘coin age’ – the time in which a coin is held or at stake. Zheng, Z; Xie, S et al. (2017)
Blockchain Challenges and Opportunities: A Survey, available at https:// bit .ly/ 2JCt6pn; Bitfallscom (2018) Peercoin
Explained: The Proof of Stake Pioneer, available at http:// bit .ly/ 32EOsHV; and the Peercoin Whitepaper at http:// bit .ly/
2O4RzWE
400 A simple example calculates as a validator with 2% tokens at stake translates into being able to validate 2% of
transactions In many systems one can only stake a percentage of coins they hold, e.g. 22% which means holding 100
coins allows a maximum of 22 to be staked and also incentivizing the holder to keep a higher amount invested in the
system’s currency. See Martinez, J (2018) Understanding Proof of Stake: The Nothing at Stake Theory, available at
http:// bit .ly/ 30FnyxV
401 B the amount of their stake/ownership of a currency.
402 DPoS is currently used by EOS, Bitshare, Steem, Ark, and Lisk.
403 PoET is now the consensus model of choice for Hyperledger Sawtooth’s modular framework
404 https:// medium .com/ @ pavelkravchenko/ consensus -explained -396fe8dac263
405 Adoption includes Neo, Tendermint, Polkadot, Hyperledge Fabric, and Zilliqua. See Major, R (2018) Proof-of-Stake
(POS) outperforms Bitcoin’s Proof-of-Work (POW), available at http:// bit .ly/ 2xY8GhW; Baliga, A (2017) Understanding
Blockchain Consensus Models, available at http:// bit .ly/ 2YbMHmi
406 Dwork, C; Nancy Lynch, N & Stockmeyer, L (1988), Consensus In the Presence of Partial Synchrony, available at http://
bit .ly/ 2M1mbWa
407 K. N. Ambili et al. (2017) On Federated and Proof Of Validation Based Consensus Algorithms In Blockchain, available at
http:// bit .ly/ 2YVv3Ai
408 For faster ‘block times’ – that is, the time it takes to produce one block.
409 But see Ethereum co-founder Vitalik Buterin’s concern on how to implement POS in Ethereum to improve scaling. He
identified 4 possible hurdles: (i) Having lower than expected participation rates invalidating (ii) Stake pooling becoming
too popular (iii) Sharding turning out more technically complicated than expected and (iv) Running nodes turning out
more expensive than expected, leading to (1) and (2). See Maurya, N (2019) Vitalik Lists Down Four Hurdles Proof of
Stake, available at http:// bit .ly/ 2Y05PiM
410 The term ‘ICO’ is derived from the term ‘initial public offering’ (IPO) used in securities and share listings

78 Security Aspects of Distributed Ledger Technologies