Can a Blockchain be Built Like This?

Question

Can a Blockchain be Built Like This?

1) Alice sends Bob one X-coin.

2) The blockchain's protocol takes X and the next (say) 100 transactions and puts them in a block.

3) Distributed peer-to-peer nodes verify all the transactions in this block. They all work off the same consensus protocol block rather than creating individual competing blocks.

4) Once 51% of nodes verify and sign that all the transactions in the protocol block are legitimate (and boot illegitimate ones) the protocol stacks the (now immutable) block on the updated, broadcast and accepted chain and pays all miners a fixed percentage of the completed block's block reward (proportional to transferable mining rights they own).

5) Repeat

As I understand it (and I probably don't), a Proof of Permit (PoP) system like this appears better than traditional Proof of Work (PoW) and Proof of Stake (PoS) systems because:

• Costly calculations and energy consumption are eliminated;

• Mining centralization (and it's regulatory threat) is reduced;

• Distributed consensus occurs because miners work off the same block and can't advance and be paid until they concur and sign that block;

• The Nothing at Stake (NoS) problem is minimized because miners simply can't create other blocks or chains;

• Chronological verification and instantly immutable blocks prevent double-spending;

• Coins are freed and spent instead of hoarded and staked like PoS systems;

• Downward price pressure is reduced because miners don't have to sell block rewards for fiat to buy electricity for mining;

• Miners are paid every time instead of sporadically over time;

• PoP remains distributed, decentralized, secure and trustless;

A 51% attack remains possible if an attacker can acquire 51% of the mining rights, although this could be offset by rising permit prices as they did so, and by the fact that increased investment increases an owner's incentive to maintain their system rather than destroy it. A tenant can acquire matches and burn down their apartment building (even without having to acquire 51% of the units) but rarely does.

The above simple logic is likely wrong, I just don't know how. What technical or conceptual errors exist? Please rip this to shreds so I can try to reconstruct it better.

Thanks.

Answer 1

Surely your idea is appreciable but there is some subtle points one needs to consider, some of them I tried to put in brief. Similar ideas are in existence and the community is working to fix the holes. I will suggest reading about Casper(PoS for ethereum), Algorand(S Micali), Bitcoin-NG, CAP theorem, Byzantine agreement etc.

2) The blockchain's protocol takes X and the next (say) 100 transactions and puts them in a block.

When you say the "blockchain's protocol" accumulates the transaction and puts into them into a block practically these needs to be done by some single miner(or validator or node). There are several questions one has to consider

Q1. Who will have the right to create the block and how to decide it? Also how to ensure the fairness among the miners that they will get in return proportional to the running cost.

Q2. Also what incentivises them to participate in the consensus protocol

Distributed peer-to-peer nodes verify all the transactions in this block. They all work on the same consensus protocol block rather than creating individual competing blocks.

Q3: How the block will be distributed to the entire network and what consensus mechanism should they follow? Should it be Byzantine Agreement or PoS or PoW?

Once 51% of nodes verify and sign that all the transactions in the protocol block are legitimate

Q4: What constitutes the 51% nodes in the protocol, for example in PoW it is 51% computation power. Surely it can't be the number of nodes in the network as a miner can create as many numbers of nodes as it want's gaining the absolute majority(Sybil Attack).

The above question will raise the question of the barrier to entry say monetary entry so we are going back to Proof-of-Stake.

Now considering the benefits that you are claiming.

Costly calculations and energy consumption are eliminated

It purely depends on the consensus protocol miners follow to agree on the majority rule.

Mining centralization (and it's regulatory threat) is reduced;

If the barrier to entry to the consensus protocol is quite low and if there is no randomization as it is, in this case, the chances that miners will come together till 51% size to gain more than the fair share by rejecting consensus from anybody outside the pool eventually taking all the reward.

The Nothing at Stake (NoS) problem is minimized because miners simply can't create other blocks or chains;

Chronological verification and instantly immutable blocks prevent double-spending;

The above two points implicitly assuming synchronization among the clients and does consider the CAP theorem in consideration.

Coins are freed and spent instead of hoarded and staked like PoS systems; Miners are paid every time instead of sporadically over time;

The above two question is the consequence of immediate agreement among miners, which has issues like synchronization and also nothing at stake attack.

I am not certain I understood the following point quite clearly.

Downward price pressure is reduced because miners don't have to sell block rewards for fiat to buy electricity for mining;

Answer 2

This is a very interesting idea and looks logical. My analysis is that the nodes would require identities to verify and sign the transactions in the block. This creates a problem of now preventing illegitimate access. The bitcoin proof of work mechanism does not create security by trying to prevent access but does it by making it difficult to solve the puzzle and using a system of rewards for honest behavior. Any system that tries to prevent people or systems from accessing it will be hacked as people will always find a way.