Proof-of-Stake for Consensus in Cryptocurrencies
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Blockchain technology and cryptocurrencies, with Bitcoin and Etherum leading the field, has gained a much attention in recent years. Not only because of their highly volatile prices, which makes them a perfect trading object, but also because of the potential for adaption of blockchain in other fields. Blockchain technology can be applicable to a broad range of applications by providing transparency, efficiency and security in a decentralised fashion where a trusted third party is no longer needed. However, along with this rapidly evolving technology, several concerns have been raised, especially in regard to excessive power consumption. The method used in Bitcoin and blockchain technology to reach consensus - achieve trust without a central authority is called proof-of-work (PoW). PoW is seen by some to be costly and inefficient. Other solutions have been proposed, one of the most popular is proof-of-stake (PoS). Consequently, this thesis aims to find out whether PoS can be a viable alternative to the current proof-of-work method. To answer this, an investigation of the different proof-of-stake schemes has been performed. Security issues have been analysed, and a case study of the Ouroboros protocol which is claimed to be secure, has been conducted. The thesis concludes with the impression that proof-of-stake can work as an alternative to proof-of-work, but the security guarantees provided is only theoretical and not yet implemented or tested in practice in a real-world environment.