A Hybrid POW-POS Implementation Against 51% Attack in Cryptocurrency System

Abstract

Blockchain and cryptocurrencies are drawing more and more attention among the people, due to the overwhelming success of Bitcoin in the market. The success and popularity of Bitcoin mainly focuses the underlying blockchain technology which is totally immutable distributed ledger, highly secured by its P2P network consensus named Proof of Work (PoW). One of the worst threats to a Proof-of-Work based cryptocurrency is 51% attack. If one or more dishonest network peer gains more than 50% of resource such as processing power, then they will become the majority decision maker in the network. Because in this kind of network, peers are competing for faster processing. The peers who have more processing capabilities can mine more blocks than others. They can easily manipulate the block chain by creating fake transactions, fraud other users even cause large scale financial damage to the exchanges. We’ll describe this majority attack in detail in chapter 2. There are several researches have already been done on how to prevent this attack and most of them suggest mixing of two or more proof of resource to form a hybrid protocol to tackle this attack. It is already proved that mixing of two or more existing protocol that is called hybrid protocol can make the network enough resistive to this attack. The recent implementations of hybrid protocols have other limitations and problems that they are facing and striving to resolve. Some of them introduce voting system, ticket distribution system, penalties, special nodes and block validator groups for preventing the malicious activities. All these implementations are successful to protect the network from 51% attack. But their main weakness is in distribution of block mining reward to the investors. From the perspective of an investor, an investor invests his hard-earned money in a cryptocurrency for making proper profit from his investment. The main source of this profit is the block reward which is generated and given to the miner on successful mining of a block. So, to ensure this profit is given to proper user on proper time interval, the consistency of block generation time interval is a vital factor. The voting system, ticket system etc. are not time controlled and over all block reward generation interval will not show a uniform distribution of profit. Another big issue is diversifying the peers by creating special committee and groups of validators the concept of P2P network is violated. In this paper we’ll describe a step by step process to implement a Hybrid PoW-PoS based consensus protocol. In our proposed system, the iv PoW mining process is only used to regulate the block generation time. The actual block generation is done by the same user with PoS consensus mechanism. There is no voting or validating committee. The entire network will validate each block. This is the major difference with other discussed system. The system will not only be able to tackle the 51% attack, it provides a uniform distribution of mining reward to the stake holders and investors by maintaining a precise block generation interval with difficulty adjustment in PoW mining and probability calculation for stake holders according to their matured staking balance. We’ll not only show how to make the system non-vulnerable to this attack but also describe in detail about how to validate the transactions and blocks in different stage of creating the block chain