What is PoH (Proof of History)? How does the PoH mechanism work?

PoH (Proof of History) is the most popular consensus mechanism today, providing a new method for validating and synchronizing data in blockchain networks. Although PoH isn’t a new concept, few people really understand its operating mechanism and applications.

So what is PoH (Proof of History)? Let’s find out with AZCoin how PoH works and its highlights.

What is PoH (Proof of History)?

Proof of History (PoH) is a consensus mechanism developed by Anatoly Yakovenko, founder of Solana Labs. PoH provides a way to ensure the synchronization and order of events in a blockchain network. Unlike traditional consensus mechanisms such as Proof of Work (PoW) or Proof of Stake (PoS), PoH uses a Verifiable Delay Function (VDF) to generate timestamps for each block in the blockchain.

PoH doesn’t require network nodes to constantly coordinate to confirm transactions, but instead, nodes can trust the timestamps and order of messages they receive. This reduces the need for constant synchronization and improves network performance.

How does the PoH mechanism work?

The PoH mechanism works based on the following basic steps:

• Cryptographic timestamping: PoH uses a sequential, anti-copy hash function to generate the timestamp. The function takes an input and produces a unique, irreversible output called a hash. This hash acts as a verifiable timestamp.
• Generating a hash chain: Solana generates a hash chain by repeatedly applying a hash function to the output of the previous hash. Each step in the chain represents an elapsed time, creating a continuously verifiable record of the time spent ordering transactions.
• Recording transactions: When a transaction is executed, it’s accompanied by the most recent observed hash. Validators confirm the validity and timeliness of the transaction by ensuring it references a hash in the current PoH chain.
• Consensus: Transactions are time stamped using Proof of History and then processed using a PoS based consensus algorithm, specifically Tower BFT in the case of Solana. Validators stake Solana’s token to participate in the network, receiving rewards for securing the network and validating transactions. 
• VDF: A core component of PoH is the VDF, which ensures that block producers must pass it in order to get their block production slot. Solana appends hashes of data related to previously generated states in the transaction chain, creating verifiable timestamps without the possibility of data replication or alternate versions.

Advantages and disadvantages of Proof of History

Below are the advantages and disadvantages of Proof of History:

Advantages

• High scalability: PoH allows for thousands of transactions per second due to reduced storage and bandwidth requirements.
• Low latency: PoH provides near-instant finalization of transactions, minimizing waiting times.
• High security: VDF makes timestamp manipulation difficult, enhancing the security of the network.
• Energy efficiency: PoH doesn’t require heavy computational resources like PoW systems, resulting in energy savings.

Disadvantages

• High hardware requirements: Devices using PoH need to meet strict technical requirements. Otherwise, data will be excluded from the consensus mechanism, leading to high hardware investment costs. 
• Difficulty in decentralization: Handling large amounts of data can lead to difficulties in decentralizing and securing the network.

Difference Between Proof of History and Proof of Work

Proof of Work (PoW) is the first consensus mechanism used in Blockchain, typically Bitcoin. In PoW, miners compete to solve complex computational problems and the first to solve them will have the right to add new blocks to the Blockchain. However, PoW requires the use of a large amount of energy and computational resources, which can be wasteful and unfriendly to the environment.

In contrast, PoH doesn’t require the use of large computational resources, instead relying on recording and verifying the time of transactions using VDFs. This makes PoH more energy efficient and can process more transactions in a short period of time.

Variants of Proof of History

Here are some variations and similar mechanisms related to PoH:

Proof of Stake (PoS)

A consensus mechanism in which network nodes (validators) are selected to create new blocks based on the number of tokens they hold and are willing to lock up as collateral. Compared to PoW, PoS consumes less energy and is more scalable.

• How it works: Validators can be selected to validate transactions and create new blocks based on the number of tokens they stake. Validators are incentivized to behave honestly because they can lose their stake if they act dishonestly.
• Pros: Saves energy, reduces the risk of 51% attacks, encourages participation from many users.
• Cons: Can lead to concentration of assets in the hands of a few users.

Proof of Elapsed Time (PoET)

A consensus mechanism designed to use hardware security tools (such as Intel SGX) to ensure that network nodes don’t cheat in creating new blocks.

• Mechanism of operation: Nodes compete to achieve a random and public elapsed time to create a block. Only the node with a valid random elapsed time is allowed to create a new block.
• Advantages: Reduced energy consumption, hardware-based security.
• Disadvantages: Dependent on specific hardware, may not be flexible with other hardware systems.

Proof of Space (PoSpace)

Proof of Space (PoSpace) also known as Proof of Capacity (PoC), is a consensus mechanism that uses the storage capacity of network nodes to prove that they can store a specific amount of data.

• How it works: Nodes must prove that they have dedicated storage space to store data before they can create a block. This process involves creating a “data table” to act as proof.
• Advantages: More energy efficient than PoW, easy to deploy.
• Disadvantages: Requires large storage capacity, not really economical in terms of computational resources.

Proof of Authority (PoA)

A consensus mechanism in which a group of trusted and authenticated validators maintain the right to create new blocks.

• How it works: Selected and authenticated validators are responsible for creating blocks and validating transactions. They must have a good reputation and be controlled by reputable organizations.
• Advantages: Fast block creation time, low resource consumption.
• Disadvantages: Centralized, can have problems with honesty and authority.

Is PoH easily hackable?

PoH is designed to be resistant to attacks with a strong security mechanism through VDF. However, no system is completely immune to security threats. Vulnerabilities can appear if the software or hardware is not updated properly or if there is a mistake in the implementation of the mechanism. Therefore, continuous monitoring and improvement of security is essential to ensure the safety of the network using PoH.

Conclusion

The above article by AZcoin has provided you with an overview of PoH (Proof of History) and how it works. Hopefully, the article will help you better understand this consensus mechanism as well as its potential applications in future Blockchain projects.