What is Proof of History (PoH)?
Proof of History (PoH) represents Solana's innovative solution to a fundamental issue in blockchain networks: determining chronological order. In many blockchains, consensus mechanisms require validators to constantly exchange messages just to agree on the exact sequence of events. Solana's PoH solves this by functioning as a pre-scheduled clock, allowing validators to efficiently determine what events have already occurred. It is distinct from traditional blockchain mechanisms which require validators to wait for a majority to agree on the current time before moving forward.
Solana's Proof of History serves as the network's internal clock. It enables validators to have a pre-determined timeline in which to operate while they determine the current network state. This eliminates the need for a large volume of constant messaging between validators, which is a major inefficiency in most other blockchains. This pre-calculated order is also not a consensus mechanism in itself; instead, PoH is combined with a separate consensus mechanism, Proof of Stake (PoS), to secure the Solana blockchain and reach a consensus among its validators on the current state of the ledger.
The fundamental difference is that Bitcoin and Ethereum require validators to communicate with each other to agree on the order of events in the network. Conversely, Solana incorporates Proof of History into the chain and does not need validators to agree on time since it already proves what event occurred when. This is Solana's biggest differentiating characteristic, enabling faster and more parallel computation.
How Proof of History Works Technically
Proof of History utilizes the widely adopted SHA-256 cryptographic hash function, as seen in Bitcoin and Ethereum. Solana's PoH works by hashing an initial value with SHA-256, hashing that output with SHA-256 again, and repeating that cycle. Since each hash of value is used as input for the subsequent value, the only way to get the value at a given time step is to first compute all previous values.
To understand how this works, consider the image of a person observing a pot of boiling water. You can observe that the water takes roughly the same amount of time to boil no matter the heat level. When someone else brings you a video recording of the water at three stages, you can estimate that approximately one hour has passed based on your observations of a similar pot of water. Proof of History functions similarly by verifying the duration through the amount of work performed at every cycle; it is essentially a verifiable delay function that proves how much real-world time passed.
Because every hash of value is used as input for the next hash of value, one cannot speed up a hash of value without the previous hash being computed first. Therefore, one has no choice but to execute a series of hashes in chronological order, and one cannot jump to the conclusion of the output. As each transaction is added to the Solana blockchain, it is timestamped by the proof of history. Each hash of value proves time has passed, meaning anyone can verify the chronological order of all prior hashes, but no one can falsely create this order because the hashes must always be completed sequentially. The output of each hash serves as proof to the blockchain's validators that an event occurred at a specific time. By knowing the specific order in which events took place before the event occurred, Solana's validators can verify transactions on the blockchain simultaneously, across multiple processor cores.
The Benefit of Proof of History to Solana's Performance
PoH enables the Solana blockchain to handle more than 65,000 transactions per second. Of course, the number is usually less than this theoretical maximum; however, Solana's network typically performs several thousand transactions per second. This is much higher than what we see on most competing networks, such as Bitcoin and Ethereum, for obvious reasons.
Since Solana doesn't need to wait for other validators to send messages, Solana's validators don't have to spend so much time agreeing on the chronological order of each transaction. Instead of waiting, the processors and memory in the validators can work on many transactions in parallel. This gives Solana a distinct advantage in terms of how much transactional traffic the blockchain is capable of handling and how quickly a transaction will be confirmed.
In comparison to Ethereum's consensus mechanism, Solana's Proof of History enables its network to reach transaction finality in less than a second. The fees required for each transaction on the Solana blockchain are also typically below a penny, which is far cheaper than other blockchain networks. These performance metrics enable Solana to be viable for real-world use cases such as high-frequency trading and gaming. The Solana blockchain also supports hundreds of decentralized applications and is currently the leading blockchain for Web3. Solana's high-speed and low latency are made possible by how its Proof of History consensus algorithm operates and the parallel processing of transactions it allows for. Ultimately, there are still issues that haven't been solved with any blockchain's consensus mechanism. However, Solana's approach shows that there is a way to improve network performance by taking a new, unique perspective to an existing problem.
