*This literature review will focus on the flaws surrounding proof-of-work, how it causes a misalignment of interests in users, the inefficiencies of the mechanism, and explored alternative mechanisms.*
[Part 1 - Introduction - The Flaws of Proof-of-Work](https://steemit.com/blockchain/@carsonroscoe/seed-literature-review-introduction-the-flaws-of-proof-of-work-part-1)
[Part 2 - Misalignment of Interests in Proof-of-Work](https://steemit.com/blockchain/@carsonroscoe/seed-literature-review-misalignment-of-interests-part-2)
[Part 3 - Inefficiencies in Proof-of-Work](https://steemit.com/blockchain/@carsonroscoe/seed-literature-review-inefficiencies-in-proof-of-work-part-3)
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Alternatives to proof-of-work currently exist, which various other papers have discussed in the past. The most common alternative mechanism seen in cryptocurrencies is the proof-of-stake mechanism, which allows users to view their cryptocurrency holdings as their stake in the network, and get voting rights based on that stake [3][4][5]. Another alternative mechanism is a hybrid approach of proof-of-work and proof-of-stake known as proof-of-activity. These existing solutions succeed in being alternative mechanisms for a blockchain based cryptocurrency, however they do not work perfectly, in their raw form, for blockchain products that do not have the same technical requirements as a currency. Proof-of-stake relies on having a form of cryptocurrency to act as your holdings, whereas not all blockchain products necessarily possess a dedicated token or cryptocurrency in their implementations. Products may have different requirements that currencies do not have, such as requiring near-instant transactions, or near-instant confirmations.
One example of such systems would be a videogame server, which uses blockchain technology to run a decentralized online video game while maintaining a consensus on the games state across every player. Such a system would not have a dedicated currency for users to own a stake in without relying on that stake being a videogame currency, which would be ineffective due to the lack of wealth equality in video games when comparing inexperienced players to veterans. A system would be required where the top ranked players could not simply pool their power together to break the system, which is what would most likely occur in a proof-of-stake implementation. Proof-of-activity is an effective alternative in theory, however it relies on two rounds of communication to establish a block, whereas proof-of-work, proof-of-stake and proof-of-burn do this in one round of communication [6]. This results in proof-of-activity having to deal with double the latency, which is not a constraint that most online games can accept.
Another, interesting aspect of alternative mechanisms that is not explored often is changing the socioeconomic approach to a validation mechanism. Bitcoin and other cryptocurrencies use what I will refer to as competitive proof-of-work or competitive proof-of-stake. The Steem blockchain uses what has now been referred to as subjective proof-of-work, where the subjectivity of a users opinion determines how they upvote content, vote witnesses and flag content. Changing the approach to a validation mechanism is a valid way to alter the mechanism without necessarily losing the advantages it gives, depending on what the change is of course. This change of approach has worked on the Steem blockchain, however has not been without some criticism. Regardless, it has proved that a change in socioeconomic viewpoint on implementing existing mechanisms can majorly change how a system functions while maintaining the security given by the mechanism.
Therefore, competing mechanisms to date have had two avenues of exploration, changing the underlying mechanism (proof-of-work, proof-of-stake, etc) and changing the socioeconomic approach (competitive, subjective, etc). Various mechanisms have their own improvements, faults and criticism, however on the research side this is lacking. Essentially, there are a lot of case studies of single cryptocurrencies attempting a change, without much publicly available research comparing these differences in controlled environments.
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[3] Bentov, I., Gabizon, A., & Mizrahi, A. (2016, February). Cryptocurrencies without proof of work. In International Conference on Financial Cryptography and Data Security (pp. 142-157). Springer Berlin Heidelberg.
[4] King, S., & Nadal, S. (2012). Ppcoin: Peer-to-peer crypto-currency with proof-of-stake. self-published paper, August, 19.
[5] Vasin, P. (2014). Blackcoin’s proof-of-stake protocol v2.
[6] Bentov, I., Lee, C., Mizrahi, A., & Rosenfeld, M. (2014). Proof of Activity: Extending Bitcoin's Proof of Work via Proof of Stake [Extended Abstract] y. ACM SIGMETRICS Performance Evaluation Review, 42(3), 34-37.
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*Thank you for reading! If you enjoyed the content, an upvote or follow are always appreciated as more of this content is to come! The final section, Part 5, will be posted tomorrow.*