Blockchain architecture research and development company, Input Output Hong Kong (IOHK), has been quietly pursuing a provably secure Proof-of-Stake protocol, a move that advances the company’s footprint in the highly competitive race to create Bitcoin 2.0.
This advancement, known as Ouroboros, will fuel blockchains in a way that dramatically enhances user governance, system maintenance, transaction processing speeds and blockchain scalability. This game-changing consensus algorithm is poised to attract global interest from companies, business enterprises, traders, and alternative asset investors seeking the next-generation of cryptocurrency and blockchain solutions.
Ouroboros’ release comes in response to global demand for a more efficient blockchain ecosystem that’s capable of handling increasing numbers of transactions. IOHK’s unique approach to this emerging issue involves a merging of academic research with state-of-the-art blockchain engineering. The company’s work is decentralized, open source, and patent free, highlighting it’s commitment to progressing the cryptography community as a whole.
The new Ouroboros Proof-of-Stake protocol described in a comprehensive white paper led by Professor Aggelos Kiayias, chair in Cyber Security and Privacy at the University of Edinburgh, introduces never-before-seen security and efficiency to the cryptocurrency industry.
Co-Founder and CEO of IOHK, Charles Hoskinson, remarked that Bitcoin uses a Proof-of-Work algorithm that is extremely energy intensive, rewarding only a small set of actors who are becoming increasingly more centralized and can process few transactions compared to systems like Visa and PayPal. He goes on to note that miners – despite their state of the art equipment, access to electricity, and cooling – are taking increasingly longer to verify bitcoin transactions as the number of traders and investors rises.
Says Hoskinson: “We wanted to develop a more efficient algorithm that saved energy, performed better, and connected the stakeholders of the system – the people who own the cryptocurrency – directly to the consensus of the system. This connection can go beyond cryptocurrencies to voting, consensus about making upgrades to the network and also decentralized funding of projects. None of those applications are possible with Proof-of-Work.”
Spearheaded by Hoskinson, one of the founders of Ethereum, and Jeremy Wood, IOHK co-founder and chief strategy officer, Ouroboros was built by an extremely talented team of developers, cryptographers, academics, and blockchain experts from over ten countries across the world.
Says Aggelos Kiayias, chief scientist of IOHK: “Ouroboros is much more efficient than Proof-of-Work based blockchains, without sacrificing the decentralized virtues and security features seen in systems such as Bitcoin. Proof-of-Stake means far less computing power is needed to run a blockchain protocol, and this can be a tremendous benefit as the costs of running Proof-of-Work based protocols can be substantial.”
Kiayias goes on to mention that the research behind Ouroboros builds on an understanding of secure systems design principles. He sees this innovation as a critical part of the backbone that will run the world’s financial and business systems of tomorrow.
Hoskinson says that the advantage of this approach is that it offers a much better sense of where and how the protocol can be used, its shortcomings, and what technology it can work with. Moreover, he says, it provides customers with more confidence in the systems that use Ouroboros, ensuring that their blockchains are secure and fully optimized.
Concludes Hoskinson: “Our hope is that this process can be replicated by our peers and competitors to improve the overall state of research and development. At the very least, the process has produced some great results for everyone in the industry to use.”