Proof of History (PoH)

Intermediate
March 29, 2023
Read time:
5m

Proof of History originates in one of today's most popular cryptocurrencies, Solana. It relies on a cryptographic method of creating a trusted system to provide the timeline of transactions, verify events and prove the passage of time between them.

PoH ensures historical data is accurate and has not been fiddled with. This is accomplished by utilizing a hash function to construct a unique “fingerprint” of, for example, past trades.

This consensus is used to secure and decentralize the blockchain (by preventing double spending and guaranteeing that identical copies of the blockchain are maintained and hosted by all nodes).


How does Proof of History work?


PoH is distinguished by the fact that timestamps (i.e., records) are created to prove that a particular event occurred at a specific time.

Regarding technical aspects of PoH - in Solana, all transactions are hashed using SHA-256. This represents a cryptographic mathematical operation performed on digital data. Its essence is relatively simple and repetitive - an input is taken in the process, and a unique, impossible to predict output is generated. Said output becomes the input for the next hashing. This process undergoes countless repetitions and creates a chain of hashed transactions.


What is the purpose of this? The hashing process puts the transactions in a verifiable, authentic order. Nodes require less time to validate the transaction sequence, making it much quicker for the network to select a new validator.


Advantages of Proof-of-History

  • Low transaction fees - in comparison to most cryptocurrencies, which is particularly beneficial when performing multiple transactions,
  • Simple traceability of the sequence of events on the blockchain,
  • Energy efficiency – reducing the carbon footprint for PoH-based networks,
  • Faster validation of the order of transactions and quicker validator selection,
  • Scalability - transactions are quick and as a result, the network gains scalability.


Disadvantages of Proof-of-History:

  • Strict requirements – Solana requires a specific type of hardware, and in case their requirements are not met – participation in the PoH consensus is not possible,
  • FewerdApps: Solana is often referred to as an Ethereum killer, as there are about 350 dApps built on Solana, while on Ethereum, the number of dApps built is more than 3,000.


Summary

Proof of History (PoH) is a unique sequence of computation that allows for the cryptographic verification of timestamps between two events, initially introduced in Solana cryptocurrency by its founder, Anatoly Yakovenko.


PoH aims to reduce transaction confirmation time, maintaining the blockchain's decentralized security. PoH has advantages like low transaction fees and scalability, but Solana's centralization concerns and fewer dApps than Ethereum are drawbacks.

Complete quiz
Proof of History (PoH)
Share this article
Explore other articles
Intermediate

What is Corda?

Corda enables the creation of personalized, completely independent networks that can be customized to specific needs. It is now widely used in insurance, real estate, the public sector, and healthcare.
Intermediate

What is token burning and why is it important?

Token burning can be beneficial for long-term investors but may negatively impact traders in the short term by reducing liquidity and causing price fluctuations.
Advanced

Exponential Moving Average (EMA) and Simple Moving Average (SMA)

Exponential Moving Average and Simple Moving Average are two technical indicators used in financial analysis. While SMA calculates the average price over a specific time by taking the arithmetic mean of the closing prices, EMA places more weight on recent prices.