The Next Evolution in Cryptocurrency is Proof-of-Transaction (PoT)
Fiat currency has a huge centrality problem. One central body, usually a country’s central bank, controls the creation, issuing, value, and consensus of a fiat currency. These slow and bureaucratic entities control one of the most important parts of our lives, without us having a single say in it. Correcting this has been one of the major goals of cryptocurrency. Although cryptocurrency has solved centralization largely, it has created more problems that need to be solved if cryptocurrencies are going to take over the world.
Two consensus protocols have been created in the cryptocurrency world that allow the community to participate; Proof of Work (PoW) and Proof of Stake (PoS). These consensus protocols help protect the blockchain from unwanted attacks as well as verify transactions to ensure that a unit of cryptocurrency cannot be used more than once by a user. This process is called mining. Mining also gives rewards to the community, through the production of additional cryptocurrency and transaction fees in PoW and transaction fees in PoS.
These consensuses have greatly helped to decentralize cryptocurrencies. However, they pose many problems that need solving. PoW, for any coin that uses it, tends to start off highly decentralized and low on hardware requirements and thus costs little in electricity. However, as time passes, more people will start mining. This increases the hardware needed to mine as the network adjusts the difficulty to ensure that a constant number of coins are produced. The increase in hardware need means an increase the electricity needed to operate the miners. With the prospect of climate change, this form of consensus is not too sustainable into the future. The increase in hardware cost and difficulty also leads to centralization as miners form pools to increase the likelihood of getting a block.
PoS has greatly improved upon PoW. It has reduced the hardware needed to mine (stake) the coins, meaning electricity costs are kept under control. Many PoS cryptocurrencies allow stalking with as little as one coin, meaning almost anyone in the community can take part in securing the network and verifying transactions. In PoS, a coin holder can only stake their coins by holding on to them for dear life (HODL) in their wallets. If they spend their coins, their stakes are reduced; so no one wants to spend their cryptocurrencies in PoS. Cryptocurrencies were meant to replace fiat, and not sit in a wallet. The persons with the most coins control these cryptocurrencies and smaller coin holders have an almost non-existent voice. If a person is rich enough, they can buy many coins and thus have enough votes to determine the direction of the cryptocurrency.
Those protocols are not good enough to represent the future of money. They need to be replaced and this is where a new consensus mechanism called Proof of Transaction (PoT) comes into play. PoT is a protocol that secures the network through transactions. PoT uses on-chain accumulated transaction fee as proof to generate new blocks. This encourage coin holders to use their coins. The first coin to use this consensus is called The Active Unit (TAU). TAU allow its users to become a part of what is called a fining club. A mining has a chance to pick the next block based on the amount of transaction fees that have accumulated in that club by its members over a certain period. If a mining club gets a block, its leader gets all the transaction fees in that block to manually share with the members of the club.
All consensuses are subjected to 51% attacks. PoW is subjected to a 51% attack when a single miner has more than half of the computing power on the network. PoS attacks can occur when a node holds more than half the coins. In 51% attacks, these malicious persons can choose to start a secret fork or even revert some blocks. An attacker has clear targets of the hardware power or stake needed to carry out a 51% attack, meaning a rich bad actor can greatly affect the networks if they wanted.
While PoT can have a 51% attack, it is much more difficult than PoS and PoW. An attacker always has a moving target as to the amount of transaction fees they need to accumulate. There is a one-year window to gain mining power through transaction fees, so the mining power needed is always changing. There is also an upper bound for mining power gained per transaction, meaning a rich user cannot gain control by constantly sending himself large amounts of TAUs. TAU’s ccommunity-led governance means that if there is ever a successful 51% attack, the community can vote to overthrow the attack via a hard fork.
There are 10 billion coins and the founders are giving away 1000 TAU just for signing up. They are very active on Bitcointalk and actively seeking feedback from the community. There will be no ICO, but they will release about 300,000 coins per day on a native exchange called TAU-X on October 18, 2018. The first pair will be BTC; more pairs will be added farther down the road. They will continue to operate a faucet into the future along with the native exchange. TAU plans to make a stable coin called TAUT on the ECR20 platform with 100 million locked away TAU. This will make it easier for TAU to be listed on exchanges and interact with ECR20 dapps.
TAU Official Website
TAU Official Bitcointalk ANN Thread
TAU Official Whitepaper