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How Blockchain Could Change The Management of Identities Part 2

How Sovrin blockchain works.  Sovrin consensus algorithm.


Sovrin is similar to Bitcoin in many regards. Just like Bitcoin, it is open source meaning that anybody can download the software and inspect it. This is critical to a blockchain that stores data about identities because of the potential issues with identity theft, hacking and so on. However, on a blockchain, it is possible to verify identities without accessing the full data about them.

Also just like Bitcoin, Sovrin blockchain is decentralized, meaning that the network has multiple nodes (a node on a blockchain network is a machine that contains a full copy of the blockchain).

The main difference between Sovrin and other blockchain networks is that Sovrin is permissioned, meaning that there is the Sovrin Foundation governs who can be adding data to the Sovrin blockchain.

The Sovrin Foundation is not just a non-profit, it is an international non-profit. The founders of the organization understood that to be effective, the foundation would have to be fully transparent and neutral. This is one of the reasons why the foundation is governed by a Board of members from different countries and industries. This helps the foundation ensure that it stays free from commercial or political interests that could influence its decisions. While the foundation governs the network, it does not own the network. Just like Bitcoin, the network is peer-to-peer, independent and exists on its own.


Sovrin Consensus Algorithm Intro

One of the big differences between Sovrin blockchain and Bitcoin blockchain is that Sovrin blockchain uses Byzantine Fault Tolerance Algorithm instead of Bitcoin’s proof of work. The main reason for that is that proof-of-work is a costly algorithm. On the Bitcoin network, miners first compile transactions that are occurring on the network in real time into the blocks of the Bitcoin blockchain. You can see the blocks of the Bitcoin blockchain immediately after they are created and all the information they contain by visiting https://blockchain.info/.

On the top of the page, you can see a table with the latest blocks. Height of a block is the same as the number of the block counting from block #1 that Satoshi Nakamoto has created himself after launching the Bitcoin network in 2009. Also in that table, you can see how many transactions a block includes. Typically, this number ranges from several hundred to several thousand. You can see the chart for the average number of transactions per block on the Bitcoin blockchain here https://blockchain.info/charts/n-transactions-per-block and the chart for the average number for the number of transactions on the Bitcoin network per day here: https://blockchain.info/charts/n-transactions

The reason why blockchain networks need consensus algorithms such as proof-of-work and Byzantine Fault Tolerance, proof-of-stake and others is that simple compilation of transactions into blocks of a blockchain is a trivial task for modern computers. If that was all that was required, any person with any computer could become a miner on a blockchain network, which would lead to a number of problems.


Introduction to Byzantine Fault Tolerance

On a network with Byzantine Fault Tolerance consensus algorithm, there is no mining. The network makes a decision when a majority of parties on the network that can participate in making decisions agree on a decision. Some participants on the network may not give their opinion until they hear an opinion of parties they deem important. It is easy to see how this algorithm would work for identity verification. When an employer wants to check the employment history of an applicant, the employer doesn’t really care about what all parties on the network think. It cares only about the opinion of parties it considers to be important. When a bank wants to check a credit score, it does not care about information about the identity of the person that has nothing to do with finances, such as height or eye color.