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Proof of History (PoH) – A Guide for Beginners

When the world first learned about cryptocurrencies, we discovered the Proof-of-Work (PoW) protocol. Over time, superior technologies have introduced greater efficiency in this area.

An example of such growth comes from the increased use of the Proof-of-Stake (PoS) protocol. The evolution of this system leads to the birth of more eco-friendly cryptocurrencies with faster transactions.

Those who have dared to explore ways other than PoW have launched a new trend in the sector. Today many blockchains are trying to put their innovative protocol on the market.

Our article will talk about one of the most recent innovations in the sector: the Proof-of-History (PoH) protocol.

Solana’s secret sauce

Readers who have already heard of Proof-of-History (PoH) will undoubtedly be familiar with Solana. Solana is a blockchain created to allow speedy transactions and the development of decentralized apps (Dapps).

This brief description is enough to clarify why Solana is, according to experts, among the “Ethereum killers”. We are talking about a system with low transaction costs and the ability to handle thousands of transactions per second.

Solana has a technical infrastructure that any cryptocurrency expert could describe for hours. Yet, among its peculiarities, the market observes with great attention the invention of the PoH protocol.

Solana’s whitepaper talks about the PoH protocol already in its abstract. Also, from this aspect, it is clear how its creators consider PoH as the authentic “secret sauce” of the project.

The problem that Proof of History attempts to solve

The reason why our smartphones and laptops consistently report the same time certainly does not derive from paranormal phenomena. Our devices connect to a centralized system with a specific frequency that indicates the exact time.

This mechanism applies to any time zone and removes the problem of clock synchronization. So, with a bit of stretch of the imagination, let’s now think about this first blockchain problem.

The question to ask is: how can a decentralized system refer to a centralized one? Unfortunately, different blockchains have given other answers year after year.

Let’s take Ethereum, for example. Vitalik Buterin’s blockchain uses an off-chain program to compute a median timestamp. We can find this value within each block in the chain.

Simplifying the discussion a little, we can consider this step as one of the many reasons behind Ethereum’s slowness. Each trade goes through a program outside of Ethereum that retrieves different timestamps.

Proof of History – A simple approach to a technical headache

Solana’s founders must have thought Ethereum’s timestamp mechanism was a significant waste of time. The system’s innovation keeps each transaction step on the chain.

This trick allows Solana to use significantly smaller time units than Ethereum’s. Each operation corresponds to a timestamp, as in Ethereum, with an extra secret.

Each block in the network indicates the block’s timestamp that precedes it. All this information is encrypted using the popular SHA256 algorithm.

The term “SHA” derives from “Secure Hash Algorithm”, and is one of the main strengths of the blockchain universe. A group of researchers working for the National Security Agency (NSA) conceived this system in 2001.

To give you an idea of what this system does, you can use one of the many online simulators. These sites allow you to write text or upload files, receiving a fixed-length code as output.

Each piece of information has its SHA256 code, and it is unlikely (although possible) to have the same result on different inputs. For example, the timestamp information calculated by Solana goes through this conversion process.

The consequence of encrypting time

The peculiarity of the SHA256 System is that knowing an output, it is not possible to reconstruct the input. In other words, no one can remove the encrypted layer of data transformed with this mechanism.

This is an important aspect, as no hacker can know the exact timestamp of a block on Solana. Simplifying the matter, knowing the timestamp can allow a hacker to alter the blockchain, creating massive damage to the system.

The ” avalanche effect ” is an even more important thing to know about SHA256 is the “avalanche effect”. Those unfamiliar with the system might think that the times “00:00:01” and “00:00:02” have similar hashes.

Once again, we encourage you to generate the hash codes for these two times. The difference of just one second leads to entirely different hash codes. Likewise, a slight change to the input data brings an “avalanche effect” to the output.

This feature makes SHA256 even more secure, generating an additional level of protection against hackers.

Final thoughts

New technologies are leading blockchains to become progressively faster and more secure. The system developed by Solana is undoubtedly fascinating, but we must consider that the sector is still very young.

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For this reason, it is possible that as early as 2022, we will see new protocols challenging the innovations of the PoH system. Since the PoH protocol is one of the most futuristic systems on the market, it is crucial to understand how it works.

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