What is Proof of History Consensus Algorithm?

Cryptocurrencies and blockchains have become a big part of the public consciousness, and their appeal is clear. Under the hood, though, a lot is going on. Bitcoin is famous for its proof of work and Ethereum now uses proof of stake, but what is proof of history?

Solana isn’t generally spoken of in the same breath as the two aforementioned cryptocurrencies, but it’s very close. Often dubbed an Ethereum-killer for its ability to do many of the same things, Solana’s founder, Anatoly Yakovenko, gave us the proof of history consensus mechanism.

Before understanding what proof of history is and how it works, we need to first dig into what consensus algorithms are and why they’re so important.

What are Consensus Algorithms?

Blockchains are often referred to as “distributed public ledgers.” Each of these words is key to understanding the technology, with “ledger” being perhaps the most important. This is because each “block” in a blockchain is made up of a group of transactions.

These transactions are recorded by certain network participants but require the agreement of other network participants in order to do so. These participants are independent and can be located anywhere in the world. Thus, the network is decentralized or distributed.

This ability of the network as a whole to agree on what transactions should make up a block is called “consensus.” As you might imagine, this is the most important facet of a blockchain, and it’s what makes them all tick.

We’ll get into proof of history in a moment, but you've probably heard of some others too. Bitcoin’s proof of work is perhaps best known, given that it’s the original and it’s had over 14 years of successful operation to date. Many early blockchain projects used proof-of-work consensus algorithms similar to Bitcoin.

Ethereum was one of these, but it now uses proof of stake. This consensus mechanism removes the hardware dependency so inherent to proof of work. It also eliminates a lot of the “FUD” around crypto’s energy footprint, and PC builders and gamers are definitely happy that they no longer need to compete with ETH miners for new GPUs.

What is Solana’s Proof of History?

Solana, founded in 2017 and launched in 2020, introduced a revolutionary new consensus mechanism called proof of history. Solana itself is a polarizing project, with peaks and troughs, including the performance of its SOL coin and frequent network outages, plus its association with disgraced Wall Streeter and FTX boss Sam Bankman-Fried.

Still, the technology speaks for itself. Solana’s proof of history consensus algorithm uses cryptography to establish a trustless time source for the system. Nodes are allowed to create their own timestamps, with leader nodes sequencing messages while others process transactions.

Once transactions have been sequenced by the leader nodes, transactions can be settled and published once confirmation is achieved. Proof of history, therefore, is used to ensure node synchronicity, while a proof of stake layer runs in parallel to ensure that nodes are incentivized properly.

That proof of stake element is provided by Tower BFT, a Byzantine Fault Tolerant setup that provides resilience against malicious nodes and speeds things up by minimizing latency and messaging overhead. Then there’s Solana’s Turbine, which ensures data is seamlessly transported to the blockchain’s nodes.

Solana also uses a protocol called Gulf Stream to reduce confirmation and leader switching times, a pipelining infrastructure for faster validation, and the Cloudbreak protocol for simultaneous data read and write across the network.

How Does Proof of History Work?

Proof of history targets a certain problem that blockchains have: the requirement to have a decentralized clock or some other way to ensure trustworthy timestamps.

Solana uses proof of history for this, allowing the blockchain to enjoy proof that an event has occurred at a specific moment in time. This is possible because proof of history is a high-frequency Verifiable Delay Function (VDF).

A VDF requires a specific number of sequential steps to evaluate but produces a unique output that can be efficiently and publicly verified. Solana’s implementation of this function uses a sequential pre-image resistant hash. It runs over itself continuously, and the previous output is used as the next input. At certain intervals, the count and current output are recorded.

Thanks to this mechanism, it’s easy to be certain that real-time has passed between each counter as it was generated and that the recorded order is the same as it was in real-time.

Solana uses SHA256 cryptography, and according to Yakovenko, this process is impossible to parallelize without a brute force attack that uses 2128 cores.

Data can be inserted into the sequence by appending it to the previously generated state. The state, input data, and count are all published. Appending the input causes all future output to change unpredictably, and it is impossible to parallelize or create an input that’d generate a desired future hash.

Inputs can have references back to the proof of history itself, with a back reference inserted as part of a signed message that can’t be modified without a user’s private key.

Simply put, proof of history uses VDF to imprint a unique hash and count to each transaction and event on the chain. This allows the order of events to be established easily and improves blockchain speed.

Proof of History vs. Proof of Work

Proof of work is the original consensus mechanism used in blockchains, and it underpins many cryptocurrencies, including Bitcoin. The Bitcoin blockchain can also be likened to a clock, with each ‘tick’ forward being a new block. Each block points to the last, so ordering is also effectively possible in this system.

Despite this similarity, proof of work and proof of history are very different. For one thing, proof-of-work blockchains are propagated by mining, and miners devote a whole lot of computing power to this task.

It balances out economically since proof-of-work chains like Bitcoin have a very lucrative block reward. On the other hand, these computers consume a lot of electricity, and Bitcoin is often criticized for this fact.

Proof of history, on the other hand, doesn’t require quite as much computing hardware, but it does require nodes to meet certain standards to play the part of a network validator. It’s also extremely fast in comparison to most proof-of-work networks.

Proof of History vs. Proof of Stake

While proof of work has much higher requirements in terms of hardware, proof of stake generally sits at the opposite end of the scale. Some proof-of-stake networks require so little hardware that it’s possible to run a validator node off a device like a Raspberry Pi.

It’s difficult to run proof of history with so little hardware, so proof of history could be considered to sit between the two—though much closer to proof of stake than proof of work.

Note that proof of history isn’t a complete consensus mechanism. Solana emphasizes this by using a hybrid consensus that focuses on proof of history but needs proof of stake to incentivize node behavior. After all, in a decentralized system, node operators can’t be expected to perform their services for free.

Proof of History Benefits

Proof of history isn’t very widely adopted, and its main proponent is the Solana blockchain. Let’s take a look at the main benefits that proof of history confers:

• Scalability. One of the main issues that widely adopted blockchains have is performance. Ethereum’s relative lack of scalability has led to the rise of various scaling solutions, but proof of history doesn’t require these.
• Low fees. Proof of history improves performance to the extent that fees are also minimized. In blockchains like Ethereum and Bitcoin, high fees are generally caused by a lack of scalability and gas wars between users trying to push their transactions through before others.
• Energy efficient. In comparison to proof of work, proof of history doesn’t require a huge amount of hashing power, making it extremely energy efficient.
• Secures the network. While it doesn’t quite provide network consensus, it greatly helps the network to be secure and reliable.

Proof of History Drawbacks

The fact that proof of history hasn’t been very widely adopted also points to limitations. Let’s see what those might be:

• Centralization. Because of the way proof of history works, one node generates the proof of history at any given time, and thus, the system exhibits a degree of centralization.
• Solana’s failures. Solana is a very successful blockchain platform but is often derided for its constant outages. This could certainly paint proof of history in a negative light.
• Computation. Proof of history is computationally complex, and validator nodes performing these hashes require a certain amount of processing power. This makes validating on Solana more expensive than on other proof-of-stake blockchains.

Key Takeaways

Blockchains need a way to establish the order of events, and Solana founder Anatoly Yakovenko conceived proof of history to do exactly that. It uses a high-frequency verifiable delay function to do this, with a unique hashed output that can be independently verified.

Proof of history can make a blockchain extremely performative and scalable, which has made Solana one of the top blockchain projects since its mainnet launch in 2020.

However, Solana hybridizes proof of history with proof of stake, providing an efficient consensus mechanism and incentivizing validators.