Basic Foundation of Blockchain Consensus

This post is a translation of what Block Trade posted on his blog the other day, and is translated for sharing with those who need a reference.

• Original text link: The Fundamental Underpinning of Blockchain Consensus

All P2P blockchains operate according to certain types of consensus. Many people refer to the term "blockchain rules" when defining the term "consensus", which is hardly a completely accurate expression. It may be more appropriate to say that half is right and half is wrong.

Peer-to-peer (P2P) network consensus is established by people running software on their computers. The owners of the computer have the right to run the software they want on the system and to participate in a peer-to-peer network . And if you don't like the rules regarding how the software works, you can always change the rules and run a new version of the software.

However, since a P2P network that is used only by one person is virtually useless, when running this new version of software, you must find other people who want to run the same version of the software.

Fork of cryptocurrency (digital asset)

In the cryptocurrency scene, changes to P2P network rules are commonly referred to as "fork". It is named after some people keep running older versions of software, while others use newer versions of the software, making the network split apart from each other. One community running the same existing software is divided into two communities operated by different rules .

Anyone who wants to run both different versions of the software can do so at any time. If someone decides to run both of these software, it means that they are worth both the old coin (token) and the new coin (token) . Cryptocurrency exchanges generally have this view.

How far can the rules be changed?

There are no restrictions on how and where to change the rules when a fork occurs. For example, you can have as many forks in a way that all coins are distributed only to your employees. However, such a network has a characteristic that it is not popular with many people because it is distributed exclusively to specific people unless it promises to distribute coins (tokens) in the future.

Based on the Ethereum blockchain, the ICO of ERC-20 tokens, which uses various versions of software versions, sets their own new rules, distributes tokens to their team members, and sells the tokens to the public, It can be seen as a fork in the sense.

After all , there are no technical and legal restrictions on how far you can change the rules while forking . The only real question is how many people will actually accept the change . Coins or cryptocurrency networks have no value if there is only one participant.

"True cryptocurrency consensus" means the person who wants to operate the network within the rules of the cryptocurrency network and who gives value to the coin (or token) . Everyone decides that the coin is no longer worth it, can leave the network, join Lee, think it's more valuable, or start a new fork of his own.

Didn't you say the code is Law?

The rules of the cryptocurrency network can change at any time, and generally have properties that change over time. Therefore, the term "Code is Law" is a term that has no meaning unless the actual legal agreement is supported. It would be called Code is Law if there was an official legal contract or right to establish a code to comply with the rules of the code among all participants in the cryptocurrency network.

Code is Law can be a terrible concept if you don't have clear rules on how to update contracts over time and how to deal with code bugs. This is because software that is inevitably twisted completely complicated cannot operate exactly as intended.

Beyond the blockchain consensus

In reality, most blockchains are hardly considered legally binding, as mentioned above . The greatest philosophical idea triggered by cryptocurrency can be defined as voluntary cooperation as an integrated agreement . All individuals may voluntarily support the rules of a particular network, depending on their thoughts or intentions, or may be left out of the network if they do not agree. This approach will lead to a new mode of behavior in which many people will autonomously organize and move in the future to come.