What technologies does diva.exchange use : DIVA.EXCHANGE

March 2023

What technologies does diva.exchange use

Modern people are surrounded by a huge number of technologies. It is not an exaggeration to say that technology is used in every sphere of our life. Of course, technological progress has made everyday life more comfortable. However, despite assurances from manufacturers, not all technological innovations are safe and optimal (or, for example, energy efficient) for use.

In this article, we will try to explain why diva.exchange uses various developments to create the first of its kind free digital asset exchange technology.

Proof-of-Work: a proven mechanism

Proof-of-…. – the principle of protection of network systems from abuse of services (for example, from Denial-of-Service-attacks). There are several methods of such protection, the most famous of which are proof-of-work and proof-of-stake.

Proof-of-Work: The idea behind this principle of data protection is that it is possible to make access to a server so difficult that abuse becomes fundamentally unprofitable. To do this, each time the client accesses the server, the client must provide the result of some fairly long work (for example, the solution of a mathematical problem), the result of which is easily and quickly checked on the server side. Similar schemes are also known as client puzzles (client puzzle function), computational puzzles (computational puzzles), or CPU pricing functions. The proof of the puzzle is a unique digital signature that confirms that the client (miner) has done the job and confirms the transaction.

The puzzle must be complex and time-consuming, which means it requires considerable processing power. To solve the puzzle, miners use special equipment called Application-Specific Integrated Circuits (ASICS) or Graphics Processing Units (GPU). Miners who successfully solve the puzzle are rewarded with cryptocurrency.

Proof-of-Work has several strengths. First, it is a reliable and proven consensus mechanism. Bitcoin, the first cryptocurrency to use Proof-of-Work, has been running since 2009 and successfully maintains the integrity of its blockchain network through Proof-of-Work. In addition, Proof-of-Work is a decentralized mechanism, meaning that no entity controls the network.

Second, Proof-of-Work has a built-in incentive mechanism. Miners who add successfully blocks to the chain receive rewards, usually in the form of cryptocurrency. This reward encourages miners to continue confirming transactions and maintaining the network, ensuring its durability and safety.

Finally, Proof-of-Work is energy intensive. This is not always an obvious disadvantage, as it is a plus in the sense that it keeps intruders from trying to manipulate the network. To attack the network, the attacker must control a significant portion of the network’s computing power, known as the “50% plus one attack”. The cost of acquiring the computing power required for such an attack is prohibitive, making it most impractical.

Proof-of-Work’s weaknesses are, interestingly, the same strengths that we mentioned above.

Thus, the most significant of these is energy consumption. The energy required to verify transactions and add blocks to the chain is significant, and it is estimated that only a Bitcoin network consumes as much energy as a small country. This energy consumption drew criticism from Proof-of-Work and led to the development of alternative consensus mechanisms such as Proof-of-Stake (PoS), which require less energy.

Proof-of-Stake: a new approach

Proof-of-Stake: the idea of Proof-of-Stake is to solve some of the problems involved by Proof-of-Work, like high energy costs. Instead of considering the computing power of a network participant, the amount of cryptocurrency on an account gets considered. Thus, instead of using a large amount of electricity to solve the Proof-of-Work problem, the Proof-of-Stake participant’s percentage of possible transactions is limited.

Proof-of-Stake has several strengths. First, it is more energy efficient than Proof-of-Work. In Proof-of-Stake, validators do not need to solve complex mathematical puzzles, which means that they do not require specialized equipment or consume significant amounts of energy.

Second, Proof-of-Stake is more decentralized than Proof-of-Work. In Proof-of-Work miners with the highest computing power have the best chance of adding a new block to the chain, resulting in centralization.

Proof-of-Stake, as in any system, has its shortcomings. The main thing is its novelty. While Proof-of-Work has been running since 2009 and is used in several blockchain networks, Proof-of-Stake is a relatively new consensus mechanism and is still being tested.

Proof-of-Stake is a promising alternative to Proof-of-Work that offers several benefits, including improved energy efficiency, scalability and affordability. While it is still being tested and has its weaknesses, Proof-of-Stake has the potential to become a widely used consensus mechanism in blockchain networks.

Byzantine Fault Tolerance: old principle, new technologies

In fully distributed systems, one of the most important issues is the issue of consensus, i.e. the fundamental possibility of reaching an agreement among the majority of participants. Consensus is the basic principle of verification and security in blockchain technology.

Byzantine Fault Tolerance (BFT) is the ability of a computer system to continue working even if some of its nodes fail or act maliciously.

In professional terms, it is the function of a distributed network to reach a consensus (agreement on the same meaning), even when some nodes in the network do not respond or provide incorrect information. The purpose of Byzantine Fault Tolerance is to protect against system failures through collective decision-making (both correct and faulty nodes), which aims to reduce the influence of faulty nodes. Byzantine Fault Tolerance derives from the ancient classical problem of Byzantine generals.

This consensus existed long before the advent of blockchain and cryptocurrency technology. It is important for us to know that the protocols «resistant to the Byzantine problem» are the characteristics that a distributed system is or is not. Byzantine Fault Tolerance denotes a new protocol class that does not require voting tokens as in Proof-of-Work or Proof-of-Stake. It also allows for the signing of a block even if 1/3 of the members fail or act maliciously. Byzantine Fault Tolerance also solves the problem of system failures and communication delays.

Conclusion

We tried to describe the key technologies that diva.exchange uses. To date, diva.exchange believes that the best option for developing a secure network is to improve Byzantine Fault Tolerance in combination with Proof-of-Stake algorithms.

This combination of technologies will make the product energy-efficient, distributed and protected.

This is diva.exchange

The non-profit association diva.exchange, Switzerland, uses a barrier-free and collaborative approach to create free banking technology for everyone. Open source technology ensures the privacy of all participants in the financial system of the future. The blockchain-based system is fully distributed. Everyone can participate in diva.exchange.

Diva.exchange is committed to the belief that only commercially free technology can reliably protect user privacy.

Collaboration with the scientific community plays an important role in the development of diva.exchange. The results of diva.exchange research are constantly being validated by academic institutions and publicly presented at specialized conferences.