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Think about for a second that you just view the world monetary system as one massive centralized hornswoggle that advantages the few on the expense of the numerous — perish the thought.
Ultimately, you come round to the concept that a fairer system is perhaps attainable by decentralizing authority amongst many impartial contributors. As a substitute of a trusted central entity validating transactions, these contributors would run their very own nodes, verifying and sustaining the community by distributed consensus.
However right here’s the problem: How do you get 1000’s of decentralized actors — every extremely incentivized to cheat for monetary acquire — to agree on the validity of one another’s work? If even a small group have been to efficiently deceive the community, confidence within the system would collapse.
Satoshi Nakamoto’s resolution was proof-of-work (PoW), whereby miners repeatedly hash block information with various nonce values, aiming to discover a resolution that meets particular problem standards. The primary to succeed will get to suggest a brand new block and earns a reward paid in bitcoin. Nobody can cheat as a result of each different node shortly verifies or rejects every block earlier than it’s added to the chain.
This technique has labored fairly properly for BTC, which has had some modest success (lol) in establishing itself as a globally acknowledged, censorship-resistant retailer of worth. Nonetheless, it’s not with out its trade-offs. Bitcoin’s PoW mannequin leads to sluggish transaction speeds and excessive power consumption. The community processes simply seven transactions per second (TPS) on common, far under trendy digital fee techniques like Visa.
Whereas layer-2 options just like the Lightning Community assist scale Bitcoin’s capability, its base layer stays restricted. Mining additionally consumes power on the dimensions of total nations, drawing criticism from environmentalists and regulators alike.
As limitations go, although, none of this has been a dealbreaker. However when Ethereum emerged with the objective of programmability by way of good contracts, scaling turned a a lot greater difficulty. Executing code onchain is way extra computationally intensive than executing easy transactions, and Ethereum’s base layer (earlier than rollups) manages solely 15-30 TPS, resulting in congestion, excessive charges, and sluggish confirmations throughout peak demand.
Enter Solana’s 2017 breakthrough: proof-of-history (PoH).
PoH isn’t a consensus mechanism — it’s a cryptographic timekeeping system. As a substitute of validators consistently speaking to find out transaction order, PoH pre-establishes a verifiable sequence of occasions utilizing steady hashing (SHA-256) to create an immutable timeline of transactions.
Pause. I do know this can be a lot. The principle takeaway right here is that PoH theoretically permits Solana to validate 50,000 to 65,000 TPS. That’s much more than Bitcoin and Ethereum, y’all. Transactions settle nearly immediately, making Solana one of many quickest public L1s.
The community combines PoH with proof-of-stake (PoS) to steadiness pace, safety and decentralization. In contrast to conventional PoS networks, which require validators to constantly agree on timestamps, Solana’s blockchain construction inherently encodes transaction order. That lets validators focus purely on verification and safety, eliminating a serious bottleneck in consensus.
After all, PoH has its personal downsides.
