ALEHUB: Decentralization, Mining, and Anonymity

May 28, 2018

Bitcoin Press Release: Systems based on distributed ledgers have appeared not a long time ago, but have already made a significant impact on the development of IT. These systems are built on blockchain – a data structure which is factually an ordered sequence of blocks (data structures too), linked through the mechanism of cryptographic hash-sums. Blockchain allows to implement not only distributed, but exactly decentralized system. And these terms require special attention.

Anonymity is a key feature of mining in most modern cryptocurrencies. Anonymity is the only reason to use such protection mechanism as proof-of-work. It identifies users by their calculational power. I.e. factually there is some abstract value which denotes speed of calculating hash-sums. It is used to express overall power of nodes controlled by different users. The control is performed by the time required to create each block. The higher the difficulty is, the more overall power is required to find appropriate hash-sums. Anyway, it is random process, in which every 10 minutes (considering Bitcoin as example) one user wins the race.

The essence of proof-of-work is studied in multiple scientific papers, and some aspects of its functioning were modified as the distributed technologies were being developed. For instance, the longest chain rule is recommended to be substituted by rule of heaviest observed subtree of blocks. Besides, some research has been made on improving the transaction bandwidth of cryptocurrencies due to modification of mining parameters.

When registration is independent, miners can stay anonymous but then Sybil attack is possible – when  one user pretends to be a cluster of users (i.e. performs identity fraud). Thus, registration requires using some specific parameters which identify user uniquely and do not allow creation of fake person. In case of PoW this is calculational power, which cannot be faked. In case of PoS this is quantity of tokens in system for some moment of time which also excludes forgery. To find mechanism of simple user identification which is trusted by everyone and which prevents forgery is non-trivial task – at least for now. In case of IPv6 it might seem reasonable to require static IP-address, but then users would do their best to acquire more addresses.

That is why ALEHUB has partially centralized registration process. Miners follow registration process held by ALEHUB (initially) or by some other certification center. The purpose is protection against Sybil attack. The certification authority does not manage access rules or anything like that: it is used only to prove physical existence of miners. In some way this approach is very like the concept of oracle in transactions of some cryptocurrencies. Besides, registration does not bring revenue, as the aim of this process is the attraction of miners to maintain the system, not making additional entrance barriers. It is important that certification is out of the scope of blockchain. When all the necessary digital signatures are collected (if several certification centers are available), miner performs registration independently and starts to take part in the voting process – i.e. acquiring digital signatures is required but not sufficient condition of making revenue out of mining.

The motivation for rejecting anonymity of miners is the necessity to follow legislation of different countries. Even solutions like TON, being designed by creators of Telegram messenger, excludes complete anonymity of users. Many analysts agree that development of systems with no KYC and AML mechanisms under current circumstances is too difficult. Implementation of such mechanisms in cryptocurrencies usually leads to deanonymization which again reverts the issue of anonymity of mining.

ALEHUB has an internal token AXEL – its course is tightly tied to the course of dollar in the following relation:

Among advantages of such token:

There is commission for making following operations:

All the fees are put into special commission fund, which exists for each time epoch. Time epoch is a sequence of time slots of fixed length. At the end of each epoch miners acquire 40% from earned funds. All the funds destined for miners are split according to the contribution into consensus process.

Thus, motivation of miners in ALEHUB is performed with the help of internal token AXEL which acts as a value container for some currency – currently, US dollar. When withdrawing funds, users can choose arbitrary currency. And due to encapsulation of value neither gateways, nor users can use the financial volatility in one’s own interests.

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