You’re probably wondering, how can Ultra’s blockchain achieve equivalent or higher security than Bitcoin and Ethereum while using considerably less energy?
It all boils down to two fundamental principles:
- The consensus algorithm: How can we ensure that bad validators can’t fake transactions on chain?
To put it simply, Bitcoin and Ethereum deploy a lottery style mechanism that randomly assigns a miner the responsibility to validate and broadcast a block of transactions. To win this lottery, hundreds of thousands of miners around the world execute a compute-intensive algorithm. When someone cracks the winning lottery ticket, they have the right to broadcast it on the network, win 1 bitcoin or 1 ether as a reward, and start the next lottery cycle for the next transaction. Validating transactions in this manner means that all the other losing lottery participants (miners) consume electricity “unnecessarily” because by design, these networks rely on artificially inflated algorithm complexity to ensure nobody can cheat.
On Ultra, the process starts in a similar fashion: Block Producers are entities that receive and validate transactions from blockchain users to earn UOS coins. These transactions all have signatures that are verified by Block Producers against the user’s blockchain public key, and if all checks out, the transaction is passed on to the rest of the Block Producers on the network. Once all the Block Producers have reached a consensus, the transaction successfully reaches “finality”.
From this simplified explanation you can see that, unlike Bitcoin and Ethereum’s POW, Ultra’s blockchain doesn’t need to artificially inflate computing complexity to work. Instead, we only execute optimized signature verification codes, resulting in an efficient consensus algorithm that requires significantly less power consumption to perform faster transactions.
2. Decentralization: How many transaction validators are considered enough to validate transactions on the network safely?
To answer this question, we had to find a sweet spot by balancing decentralization and power efficiency. In other words, we had to decide how many Block Producers were needed to achieve optimal network characteristics.
By analysing Bitcoin’s network, we can see that the network is controlled by two mining pools that, combined, control more than 51% of the network. Meanwhile, Ethereum’s network is primarily controlled by three mining pools.
With this in mind, we chose to assign seven designated Block Producers for Ultra’s blockchain. Specifically, each Block Producer on Ultra’s network holds an equal share of the mining pool. This makes Ultra’s blockchain, effectively, more decentralized and secure than Ethereum and Bitcoin while still having a solid level of redundancy in case of network or hardware problems.
Considering Ultra’s Mainnet is live and running with seven Block Producers, we’ve proven that Ultra’s blockchain is capable of offering extremely fast and secure smart contract capability without harming the environment.