Since Bitcoin's creation in 2008 as a peer-to-peer electronic cash system, many other cryptocurrencies have been created, each with a specific mechanism. But the one element that almost all cryptocurrencies are associated with is the blockchain as the main element of their architecture.
With a few exceptions, blockchain is intentionally intended to be decentralized, operating as a digital ledger that is maintained by a distributed network of computer nodes. For this reason, blockchain technology has made it possible to create trusted economic systems in which transparent and reliable financial transactions can be carried out without the need for intermediaries. Cryptocurrency is perceived as a viable alternative to traditional banking and payment systems, which rely heavily on trust.
Just like most distributed computing systems, participants in a cryptocurrency network need to regularly agree on the current state of the blockchain, and this is what we call reaching consensus. However, achieving consensus on a distributed network in a secure and trusted manner is far from an easy task.
So how does a distributed network of computer nodes agree to a decision, what if some of the nodes theoretically fail or act dishonestly? This is a fundamental question about the problem of the so-called Byzantine generals, which gave rise to the concept of Byzantine tolerance.
What is the Problem of the Byzantine Generals?
In a few words, the Byzantine Generals Problem was coined in 1982 as a logical dilemma that illustrates how a group of Byzantine Generals can have communication problems when trying to agree on the next step.
The dilemma involves each general having his own army, and each group is in a different location around the city, intending to attack it. Generals need to agree to either attack or retreat. It doesn't matter whether they attack or retreat as long as all the generals reach a consensus, i.e. make a common decision in order to implement it consistently.
Therefore, we can consider the following goals:
Each general must decide: attack or retreat (yes or no);
Once a decision is made, it cannot be changed;
All generals must agree and make the same decision and implement it synchronously.
The above communication problems stem from the fact that one general can only communicate with others through messages sent by courier. Therefore, the main Problem with Byzantine Generals is that messages can somehow be delayed, lost or destroyed.
Additionally, even if the message is successfully delivered, one or more generals may act (for whatever reason) maliciously and send a fraudulent message to confuse the other generals, resulting in an overall failure.
If this dilemma is applied to the blockchain context, then each general represents a network node, and these nodes need to reach a consensus regarding the current state of the system. In other words, a majority of participants in a distributed network must agree and perform the same action to avoid complete failure.
Therefore, the only way to achieve consensus in these types of distributed systems is to have at least ⅔ or more reliable and honest network nodes. This means that if a large part of the network decides to act maliciously, then the system is susceptible to errors and various attacks (for example, a 51% attack).
Byzantine Fault Tolerance (BFT)
In a few words, Byzantine Fault Tolerance (BFT) is a property of a system capable of withstanding a class of failures arising due to Byzantine Generals Problems. This means that the BFT system can continue to operate even if some of the nodes are down or acting maliciously.
There is more than one possible solution to the Byzantine Generals problem and therefore several ways to build a BFT system. Likewise, there are various approaches to blockchain to achieve Byzantine fault tolerance, and this brings us to so-called consensus algorithms.
Blockchain Consensus Algorithm
We can define a consensus algorithm as the mechanism by which a blockchain network reaches consensus. The most common are Proof of Work (PoW) and Proof of Stake (PoS). But we'll look at Bitcoin as an example.
While the Bitcoin protocol prescribes the ground rules of the system, the PoW consensus algorithm determines how these rules will be followed to achieve consensus (for example, during the verification and confirmation of transactions).
Although the concept of Proof of Work is older than the cryptocurrency itself, Satoshi Nakamoto developed a modified version as an algorithm that allowed the creation of Bitcoin as a BFT system.
Please note that the PoW algorithm is not 100% tolerant of Byzantine errors, but due to the expensive mining process and underlying cryptographic techniques, PoW has proven to be one of the most secure and reliable on the blockchain. In this sense, the Proof of Work consensus algorithm developed by Satoshi Nakamoto is considered by many to be one of the most ingenious solutions to the Byzantine errors.
Conclusion
The Byzantine Generals Problem is an intriguing dilemma that eventually gave rise to BPT systems that are widely used in a variety of systems. Beyond the blockchain industry, several use cases for BFT systems include aviation, space, and nuclear energy.
In the context of cryptocurrencies, efficient network communication along with a good consensus mechanism is vital for any blockchain ecosystem. Ensuring the security of these systems is an ongoing effort, and existing consensus algorithms still have several barriers to overcome (such as scalability). However, PoW and PoS are very interesting approaches to BFT, and certainly encourage potentially interested applications to adopt widespread innovative technologies.
