51% attacks, where an attacker gains control of the majority of a blockchain network’s hashpower, are becoming increasingly popular this year – we’ve seen it happen with cryptocurrencies such as Monacoin, Verge and Bitcoin Gold over the course of the past few months. Such an attack allows the malicious entity (or consortium of entities) to effectively control transactions – whether it’s reversing them, double-spending them, or outright denying them.
The recently-launched Crypto51 even lists the cost of such an attack on a number of Proof-of-Work-based cryptocurrencies – one can see that to sustain such an attack for even an hour on the Bitcoin network would cost upwards of half a million US dollars. Ethereum follows closely, at approximately $480,000. Theoretically, it is possible to do so – the cost, however, is a major deterrent. Barring factors like miner centralisation, it’s incredibly unlikely that anyone would attempt this when there are easier targets with less hashpower. Nonetheless, the risk is not one that can be simply swept under the rug.
Proof-of-Stake is an obvious solution to this – due to the fundamentally different approach to validating and securing the network (where users ‘stake’ their funds on correctly building a block), the 51% attack phenomenon is virtually non-existent with this form of algorithm. It’s a more eco-friendly alternative to its predecessor, and one that many teams (including the Ethereum Foundation) are actively researching and beginning to implement.
With Laser, we’re striving to build a network to add greater anonymity and speed for cryptocurrency transactions, using one such PoS mechanism. A hard-forked version of the Ethereum blockchain, the Laser protocol is better thought of as a blockchain-agnostic service layer. Upon launch, it will greatly enhance the Bitcoin network’s tech stack, followed shortly thereafter by Ethereum and a range of other cryptocurrencies.
The Laser offering solves the problem of confirmations, which can take hours, if not days at peak times, to process. This impacts their viability as a means of payment. By using a method known as ‘pseudo-confirmations’, transactions can clear within seconds, without being opened up to the risks of double-spends associated with 0-conf methods.
The layer that the Laser protocol adds to existing blockchains further increases anonymity. By comparison, networks like Bitcoin, Litecoin and Ethereum are pseudonymous, at best. Users can opt to send funds by pooling inputs, mixing these and sending them to destination addresses (much like the CoinJoin mechanism). Fungibility and privacy are crucial if we are to consider cryptocurrency as a viable successor to physical cash – which is why Laser also supports DEXs (or decentralised exchanges) to facilitate the seamless exchange of one currency for another.
Ultimately, Proof-of-Stake algorithms are bound to dethrone the incumbent Proof-of-Work ones, vastly decreasing the attack vulnerability of the latter. It’s a necessary change to ensure the longevity of cryptocurrency. With Laser’s service layer forking from Ethereum, it will guarantee a better and more secure offering than the current Ethereum blockchain by incentivising nodes to act honestly – and penalising those that don’t.
About The Author
Shidan Gouran is the CEO of Laser, a blockchain protocol offering several dimensions of functionality that will take cryptocurrencies to the next level.