The Homework Task Steemit Crypto Academy Week 13 - Homework Post for @alphafx

STELLAR CONSENSUS PROTOCOL

Stellar is a decentralized blockchain system that operates using an open source network system that is used for the transfer of money and for making payments speedily and efficiently, and it has its own local coin called Lumen

How does stellar work ?

Stellar uses a digital system similar to jTokens( used in the JustLend platform) to represent real Fiat money and then the tokens can be converted back into real money once it gets to its destination or point of use and there are charges per transaction which is paid using the local currency , the LUMEN .

For instance , if Enoch intends to send $100 to Diana , through Stellar , the money is represented digitally by “$100 token” and it will be converted directly back to fiat money when it gets to Diana .It becomes even more useful when the transaction is international as it helps users to boycott the scrutiny and regulations of a bank set up.

@alphafx

Why is there need for a consensus protocol ?

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A decentralized system involves a network of computers( members) ,called nodes who interact without a central authority and every trade between members is updated on a public ledger and every node is informed about the changes ,since everyone is involved in the network, there is every need for a consensus on the trades incase of a security breach; when one node is hacked , or the other nodes decide to tell a lie(Byzantine nodes), or when there are multiple versions of the trade ledger , the nodes can try to compare their copy of the ledger and decide the one to go with and verify the before confirming transactions - depending on the consensus algorithm in place.

So if Tom and Sam wants to defraud the system by lying about transactions and there make counterfeit copies of the larger and they convince a few other nodes to join their quest, they will still be twarted as they is need for a consensus and a nomination( voting In favor of your statement) must require a quorum( a kind majority) and all the nodes must reach a kind of consensus , and the stellar consensus protocol is designed specifically to withstand such defects , or Byzantine nodes

What is the stellar consensus protocol like?

The stellar consensus protocol can be very ambiguous ,but in simple terms, it is a system for making decisions , and since the decisions affect every node in the system, everyone participates in this decision making process .

Practically speaking , this consensus protocol is the backbone behind the stellar blockchain and it gives an insight into the overall working policy of the platform .

Since the network uses a decentralized ledger without the need for registration, anyone can get in and out of the system as they choose and so it can be very difficult in knowing which particular group forms the majority and the number of peers in the network to get past this limitation , the SCP system makes use of a federal Byzantine system of voting on policies, like the blockchain’s ledger .

This system of voting is quite analogous to the federal system in politics, as the stellar consensus protocol(SCP) voting system occurs in phases ,. The two phases include :

NOMINATION

NOMINATION: This is the first voting stage whereby peers ,or a group of peers known as quorum slice, vote for a particular statement in the form of “I nominate T” and then the node transmitted the agreement of the peers and its own statements; there can be more than a single nominee by a node, and once a nominee is confirmed; that is , the node finds more nodes that nominates the same statements as it’s – a quorum, it confirms those statements ,and it becomes a candidate.

BALLOTING

BALLOTING: This is another phase of federated voting whose aim is to create an agreement between all the nodes in the network and to commit to a single statement. Some statements have a higher counter value than others so there is a kind of hierarchy , and nodes are required to commit to the statement with higher precedent and this is done by a series of voting. Balloting occurs in two stages:

Preparation stage

Preparation stage: This is the stage where a given node finds other nodes or quorum that can promise to vote for a particular statement; or those that promise not to vote for an opposite statement depending on their respective stage of federated voting, so if statement “Y” is a candidate, voting in this stage takes the form of “ I prepare to commit to Y” , this message is sent to all the peers in the network so as for everyone to be confident in doing the same.

Commitment

Commitment: Since all the nodes must have nominated , and are prepared to commit to a particular statement, and the byzantine nodes has , at this point, been filtered using the quorums , this is the stage where another round of federated voting occurs ,and this time the peers vote in the form of “ I commit to Y” and all other less count statements are rejected or cancelled . at this stage, a consensus is reached and a decision is made.

What makes the Stellar consensus protocol special ?

Absence of proof of work or mining:

The stellar consensus protocol is unique and not built around a mining network like other cryptocurrencies, like Bitcoin , this enables it to process transactions very quickly and it is even best for international transactions because it takes away all the standardizational protocols that Banks require.