A Survey on Consensus Mechanisms and Mining Strategy Management in Blockchain Networks (1805.02707v4)

Abstract: The past decade has witnessed the rapid evolution in blockchain technologies, which has attracted tremendous interests from both the research communities and industries. The blockchain network was originated from the Internet financial sector as a decentralized, immutable ledger system for transactional data ordering. Nowadays, it is envisioned as a powerful backbone/framework for decentralized data processing and data-driven self-organization in flat, open-access networks. In particular, the plausible characteristics of decentralization, immutability and self-organization are primarily owing to the unique decentralized consensus mechanisms introduced by blockchain networks. This survey is motivated by the lack of a comprehensive literature review on the development of decentralized consensus mechanisms in blockchain networks. In this survey, we provide a systematic vision of the organization of blockchain networks. By emphasizing the unique characteristics of incentivized consensus in blockchain networks, our in-depth review of the state-of-the-art consensus protocols is focused on both the perspective of distributed consensus system design and the perspective of incentive mechanism design. From a game-theoretic point of view, we also provide a thorough review on the strategy adoption for self-organization by the individual nodes in the blockchain backbone networks. Consequently, we provide a comprehensive survey on the emerging applications of the blockchain networks in a wide range of areas. We highlight our special interest in how the consensus mechanisms impact these applications. Finally, we discuss several open issues in the protocol design for blockchain consensus and the related potential research directions.

• The paper examines evolving consensus protocols, detailing the shift from classical BFT to Nakamoto consensus using Proof of Work and alternative PoX schemes.
• The study investigates mining strategies and incentive mechanisms, revealing tactics like selfish mining and suggesting countermeasures to fortify network security.
• The paper underscores future research directions, advocating scalable solutions and refined incentive models to boost efficiency in diverse blockchain applications.

Overview of Consensus Mechanisms and Mining Strategies in Blockchain Networks

This paper presents a comprehensive exploration of consensus mechanisms and mining strategies in blockchain networks, emphasizing permissionless consensus protocols and their design complexities. Addressing a decade-long evolution, the survey captures the intricate design requirements shaped by the inherent characteristics of blockchain technologies: decentralization, immutability, and self-organization.

Core Focus

The paper scrutinizes the development of decentralized consensus protocols, primarily employed in open-access blockchain systems. These systems have garnered attention due to their capabilities of managing data transparency and resilience against tampering, essential for FinTech applications.

Consensus Mechanisms

A detailed analysis highlights the transition from classical Byzantine Fault Tolerant (BFT) protocols to complex decentralized consensus mechanisms like Nakamoto consensus. Nakamoto's protocol, underpinning numerous cryptocurrencies, relies on Proof of Work (PoW) to achieve consensus among nodes. By requiring computational puzzles, PoW mitigates Sybil attacks through resource pricing mechanisms. However, the efficacy of PoW hinges on an assumed honest majority and probabilistic finality.

Permissionless Consensus and PoX

The document explores alternative Proof of Concept (PoX) schemes, designed to enhance or complement existing PoW systems. These include:

• Proof of Stake (PoS): Offering energy-efficient consensus by leveraging stakeholders' existing assets as a security guarantee.
• Proof of Elapsed Time (PoET): Depending on trusted hardware to introduce randomness and fairness in leader selection.
• Hybrid Consensus: Combining PoW with PoS or BFT protocols to form layered systems like PeerCensus, aiming to improve scalability and consistency.

Mining Strategies and Incentive Mechanisms

Analyzing game-theoretic frameworks, the survey addresses node behavior in block mining:

• Rational nodes may deviate from protocol expectations for profit maximization.
• Strategies like Selfish Mining exploit the structural weaknesses within protocols, showcasing vulnerabilities in the consensus processes.
• The paper highlights potential countermeasures, stressing the need for refined incentive mechanisms and broader adaptive strategies.

Emerging Applications and Implications

Blockchain technology extends beyond cryptocurrencies, impacting numerous areas including IoT, healthcare, and decentralized finance. Emerging applications reveal both the utility and challenges posed by blockchain adoption. For instance, side-chain and sharding techniques promote scalability, essential for supporting high-frequency transactions.

Open Issues and Future Directions

The paper outlines several open research questions:

• Balancing security and performance in consensus protocols remains critical, especially with increasing network size and complexity.
• Addressing incentive alignment to prevent exploitative behavior and ensure network stability.
• Developing scalable solutions for consensus and transaction validation in diversified applications.

Ultimately, this survey not only delineates the current state of blockchain consensus mechanisms but also urges ongoing research into enhancing efficiency, scalability, and security, which are pivotal for blockchain networks' continued evolution and broader application.