BEEP BEEP, BOOP?

Standard

All miners compete to create the next block. The fact that this is a computationally intensive task combined with the financial reward for creating a block that is accepted into the chain creates a Nash equilibrium where it is beneficial for users to cooperate in building a single ever-growing history of events, thereby statistically outrunning a theoretical attacker over time provided he does not control more hashing power than the rest of the network combined. Still, network delays and other disturbances lead to infrequent reorganisations of history. Although extended rollbacks are very unlikely, even this small chance is too high for a system designed to support global digital identity.

Proof of work is resource intensive and favors mining pools over small users, leading to recentralization. More importantly, Bitcoin only ever achieves tentative consensus, because nodes can never be sure whether other nodes are following a different chain that they do not yet know about.

Hydra will provide a completely open and permissionless consensus mechanism, allowing all users to participate and benefit by staking coins. Hydra will provide final confirmation after each block and selects a new committee at every step using a verifiable random system that protects committee members from coercion by only revealing their identity after they have cast their vote. In addition, the functionality of the blockchain client will be streamlined and optimized for the purpose of DID management and tightly connected to the Prometheus key vault.

There is no free lunch. If you didn’t pay anything, you are the product.

Good will can change. A system of certified management authorities is NOT decentralized. Contractual obligations are dependent on local laws, which can change.

Blockchains and other decentralized ledger technologies that have a consensus mechanism including economic incentivization for maintainers have a specific advantage over other decentralized forms of storage:

Financial gain is a strong incentive for node owners to adequately maintain agreement on global state, protect the stored data against accidental or deliberate corruption, and to accept any and all transactions users might make.

DID documents will only change rarely for regular users — generally when DID documents are first created or when keys are lost or compromised. This keeps barriers to entry low for users. However, the transaction flow for companies and other institutions will be very different, as they will likely need to manage hundreds or thousands of service endpoints and keys for different DIDs. This steady flow of transactions will keep the IOP coin liquid and provide reliable monetary incentives for node maintainers.

You are not paying for your identity, you are paying people to store information about your identity.

If we want to provide verifiable identity without relying on a central trusted authority, we need a decentralized root of trust. Maintaining that decentralized root of trust is resource intensive in any case (not only for POW systems).