Blockstack published a concept draft on Feb 6, defining a Proof Of Transfer (POX) algorithm that will eventually merge Bitcoin mining with Web 3.0 —the next generation of user-owned Internet that is likely be built on top of blockchains. The whitepaper notes that changes to existing Bitcoin protocol are hard, not desirable by the community, will add complexity and harm it’s deep security. Since, Bitcoin’s security is in a way linked to and bolstered by its limited scripting language. Blockstack remarks that Bitcoin is the rock on which the cryptocurrency world is standing on. Its more suited to the purpose of powering and providing security for novel blockchains which will eventually come to define Web 3.0 -the next iteration of the World Wide Web.
We’re believers in Bitcoin.
Today, we’re proposing Proof of Transfer (PoX) that anchors the security of Stacks 2.0 to Bitcoin.
Miners get newly minted STX, transaction fees, and more.
Stacks holders who participate in consensus can earn Bitcoin rewards. https://t.co/kqIyq46TZk— Muneeb (@muneeb) February 6, 2020
“We are saying that Bitcoin is already so dominant and so secure that it’s entirely possible that Web 3.0 emerges on top of Bitcoin,” said @muneeb https://t.co/LbtIihhs1S— brad.id 🎙️🌩️ (@fluidvoice) February 7, 2020
What’s The Proof Of Transfer (POX)?
Proof of Transfer (POX) is a newly proposed mining mechanism that uses rewards from Proof of Work (POW) of an established protocol (in this case: Bitcoin) to secure a new blockchain.
Proof of Work (POW) requires participants to commit computational and financial resources to do work (solve complex mathematical puzzles) and be rewarded with that cryptocurrency, upon finding the solution.
On the contrary, Proof of Transfer (POX) will require participants to commit financial resources directly by transferring the Proof of Work (POW) cryptocurrency (Bitcoin) to some other participant in the network, who’s contributing to the novel network. They will then be rewarded by the new blockchain’s native cryptocurrency.
Proof Of Transfer (POX): Explained In Detail
The Proof of Transfer (POX) concept envisions utilizing the existing Proof of Work (POW) algorithm to create new blockchains, that are anchored in Bitcoin security. The concept can enable participants to earn Bitcoin (BTC) rewards by running these blockchains. These rewards can potentially be used for consensus participation, developer funds, individual rewards etc. POX can enable a smart contract language on a new blockchain that benefits from core Bitcoin security, without changing it. This can allow developers to work with an open-source implementation of a POX blockchain tied to Bitcoin, without requiring difficult process of bootstrapping a new Proof of Work (POW) chain.
POX miners can simply distribute this valuable cryptocurrency to all participants working to ensure functioning of a new blockchain, while earning rewards. POX can resolve two challenges: properly bootstrapping new blockchains and giving incentives to participants. POX enables new blockchains to establish initial value for their cryptocurrencies as well as cause a rise in general participation interest, which will grow the new system securely. This new blockchain, in this manner, will have a built-in funding mechanism.
If adopted, the Stacks blockchain would use the Bitcoins (BTC) as the cryptocurrency, which is being transferred. In order to participate in the new Stacks blockchain, miners would track the state of both the Bitcoin blockchain and the Stacks blockchain. Then, miners would form consensus on the Bitcoin addresses for Stacks holders who are actively participating and transfer BTC to these participants. The successful miners (determined by a verifiable random function) would get to include new blocks on the Stacks blockchain and earn rewards in the form of newly minted Stacks (STX) tokens. In order for there to be a fully-functional consensus algorithm (the set of rules and protocol steps through which nodes form consensus on the state of the blockchain) on a POX blockchain, the POX mining mechanism (the mechanism providing a dynamically-adjusting incentive for miners to participate) must be combined with a set of consensus rules.
Why Does Blockstack Want To Utilize The Bitcoin Blockchain?
Bitcoin is a blockchain, with a proven track record. It was introduced in 2009 and has since cemented its position as the most secure and highest value blockchain in existence. A reluctance to cause change in the basic protocol and consensus mechanism of the system is both a hindrance in further progress, also a cause for people for believe in it, because of originality and stability in the current state of the system. Bitcoin has never been hacked or compromised, also. Plus, the Bitcoin blockchain tops the list of being most incentivized. All of these reasons, make Bitcoin the prime candidate for running the Proof of Transfer (POX) algorithm. Blockstack is reported to be actively researching the concept further.