Finality—Part 3: Total Order
"Only by relaxing the absolute perception of network events can validator rewards be removed and the block size be reduced to one message—resulting in a technology truly indistinguishable from magic."
Finality is a four-part exploration into the inner workings and technological significance of the IOTA tangle’s many-worlds Nakamoto consensus mechanism. Visit wiki.iota.org to learn more about the IOTA tangle, or click below to continue reading the Finality series with:
📕 Part 1: Two Generals
📗 Part 2: Bookkeeping
📘 Part 3: Total Order
📙 Part 4: Many Worlds
The marvel of modern distributed computing first revealed itself in 2008 when Satoshi Nakamoto outlined classical Nakamoto consensus in a white paper called Bitcoin: A Peer-to-Peer Electronic Cash System.
For the first time in history, a secure distributed network could be hosted with an unspecified number of validators, the identities of the validators did not need to be known to one another, and new participants could join the network without permission.
Central to this revolution in distributed computing was a peer-to-peer information disseminating procedure called gossip.
For instance, consider a network of many generals where each general is connected peer-to-peer with at least two other generals at any given time.
If general A sends a message to his peers, general B and general C, then general B and general C can easily forward the message to their other respective peers.
As long as all generals who receive general A’s message are incentivized to relay the message to their respective peers, the message will propagate through the network of generals at an exponential rate.
This simple yet hyperefficient protocol can reliably distribute messages to an unspecified number of network participants with minimal computational overhead and near-zero marginal cost.
But what role does gossip play in classical Nakamoto consensus? Is a gossip protocol only for the peer-to-peer exchange of simple messages, or can the procedure be applied to more complex information formats?
While ensuring their local perceptions of reality are conflict-free, validators following a classical Nakamoto consensus algorithm accumulate gossiped messages into sets of unapproved information called blocks.
In parallel to this process, validators contribute to overall network security by racing to solve a computationally intensive cryptographic puzzle called proof of work.
The leader, or first validator to solve the cryptographic puzzle, gossips the puzzle’s solution and the newly compiled block of messages to the other validators in the network.
Since each newly approved block contains an immutable reference to the previously approved block, the blockchain forms a visualization of how the network’s globally approved triple-entry ledger is evolving in real time.
This total order of network events, however, imposes an absolute perception of time on all validators following a classical-style of Nakamoto consensus with a triple-entry ledger as a bookkeeping data structure.
As a result, non-leader perceptions of reality are unique only temporarily in the process of confirming a new block, after which all validators adopt the leader’s perception of reality as the globally approved network state.
But how do validators approve a leader’s proposed perception of reality in classical Nakamoto consensus? Is it necessary for validators to exchange messages stating their opinion on every newly proposed block? Or is there a more efficient voting protocol for all honest validators to follow?
In classical Nakamoto consensus, validators vote implicitly on a block’s integrity by choosing whether or not to update their triple-entry ledgers to its proposed perception of reality.
When validators who control at least 51% of a network’s computational resources approve a puzzle’s solution and a block’s integrity, the leader is credited with the block reward and all validators update their triple-entry ledgers to the leader’s perception of reality.
Without a 51% approval weight by the network’s computational resources, adversaries not following the rules will eventually succumb to the heaviest reality, or longest chain, followed by all honest validators.
In this way, computation power serves as a scarce resource for Sybil protection where the more computation power racing to solve the cryptographic puzzles, the more secure a network’s longest chain becomes.
What’s more, the majority of validators will always follow the longest chain out of the incentive for block rewards, ensuring that a permissionless network with an unspecified number of anonymous validators always converges to a single informational network reality.
Despite this paradigm shift in distributed computing, however, classical Nakamoto consensus algorithms cease to function in the absence of validator extractable value.
In other words, if classical Nakamoto consensus validators aren’t compensated by a network with processing fees and block rewards in sufficient excess to their operating costs, then validators are not incentivized to participate in securing the network in the future.
What’s more, blockchain-based consensus mechanisms are also severely constrained in the number of messages that can be validated per second with a triple-entry ledger’s total order of network events.
Only by relaxing the absolute perception of network events can validator rewards be removed and the block size be reduced to one message—resulting in a technology truly indistinguishable from magic.
If you’re enjoying the Finality series, you may also be interested in checking out Layer One, a three-part philosophical journey into the emergence and implications of the IOTA distributed ledger technology and its parallel reality based data structure. Click below to read more.
📕 Part 1: Assimilation
📗 Part 2: Error Correction
📘 Part 3: Metamoney
🤘 Thank you for reading iologica—the blog that strives to challenge you.
✍️ The Finality series was written in large part based on the commentary of Hans Moog, which is publicly available on Twitter and Medium. Please also acknowledge Holger (Phylo) of the IOTA Foundation, unrecognized_User and Jeroen van den Hout of the IOTA Experience Teams, and John for providing valuable assistance in the creation of the Finality series.
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