Two-Tiered Consensus Mechanism Based on Proof of Work and Proof of Stake

Abstract

The key features that distinguish blockchain as one of the most secure technologies are - decentralization, privacy, and immutability. It has converted a low-trust centralized ledger held by a single third party into a high-trust decentralized ledger held by multiple entities. The main contribution of blockchain is the consensus protocol, which ensures the stable operation of the blockchain system. Consensus occurs when all nodes in a blockchain network agree on a common state of the ledger. Thus, a consensus must prohibit malicious actors from controlling the network while also granting equal rights to all nodes and mandating their participation in the consensus process. Existing algorithms such as proof of work and proof of stake are vulnerable to future attacks such as 51% attack. The proposed algorithm solves issues such as unfair miner selection, 51%-attack, forking, double spending problem with minimal computational resources. It provides adequate protection regardless of the attacker's hashing ability or currency holdings and also resolves the enormous waiting time issue for transaction confirmation.