Systems without central authority, like cryptocurrencies, rely on consensus, which enables transactions to be realized. Miners play an important role in confirming bitcoin transactions and maintaining truth in the network.
To keep consensus in a decentralized network is not simple as there is a risk of bad actors to disrupt transactions and create new ones. The problem has often been examined and debated.
Ripple Labs has recently issued white paper that studies how decentralized systems can prevent bad actors in the block chain system from making fake transactions. The Ripple Protocol consensus algorithm (RPCA) utilizes a node election system to establish transactions by adding them to a chain of closed transactions.
Speaking to CoinDesk, David Schwartz, Ripple cryptographer, told that RPCA is an important phase in the development of digital currency.
He said: “Satoshi [Nakamoto], with bitcoin, came up with the first solution to the double spending problem that didn’t require central authority. And that scheme worked, and it allowed bitcoin to be so phenomenally successful. But, it was the first such scheme, and it’s probably not going to be best such scheme and there’s going to be innovation in that area.”
Servers in the Ripple network are tasked with voting on candidate transactions during rounds every few seconds. Transactions, which were agreed by the network, are confirmed after the round closes.
The approach differs from bitcoin one, which requires several confirmations by the network before spending bitcoin.
The concept of maintaining truth in a network with the potential of fraud has been debated during decades.
In order to provide network integrity, most of the participants must be accepted as truthful. If a group of bad actors start to control the network, they are able to disrupt it. The risk poses threat to the legitimacy of the system.
A reward incentive created by bitocin solves the problem and promotes good behavior between network participants. By applying the incentive to the transaction confirmation process miners want to provide a successful ledger.
According to Schwartz, the world infrastructure for sending money is often too expensive.
Searching for a new way to provide truth for transactions would lead to the creation of new ways of sending money. The ability of Ripple to avoid memory-intensive calculations creates lower-cost money access.
Schwartz told: “I think everybody in the industry knows that international remittances are broken, there’s no good technical reason for why someone shouldn’t have access to wholesale foreign exchange rates. It’s just the way the system developed.”