# Consensus

## Proof-of-Work

Proof-of-Wok (PoW) is a protocol designed as an economic deterrent against spam and denial of service attacks. It requires participants in a series to perform some computationally hard work which needs energy and time. It was first introduced in Bitcoin and have since been the adopted consensus algorithm of many distributed ledger technologies. Ellcrys currently relies on proof-of-work to decide who and how the chain is advanced.

## Block Selection

In PoW, miners run computations to find a unique number or value that is within a pre-determined range known as the target. The target is increased or decreased depending on how difficult it is to mine a block.

Miners who can find this unique nonce have the opportunity to create a block, processes it, broadcast to other peers and receive rewards. The amount of coin reward depends on the protocol's incentive structure. When a miner receives a new block, she runs it through a series of validation checks before appending it to a branch.

Block selection is like a lottery. It is random, and the rules for deciding which block to select is known and enforced by all miners and non-miner participants.

## Incentive Structure

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The incentive structure described here has not been implemented in the current releases. We will remove this notice when we do.
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Most public blockchains award newly generated coins to miners whose blocks are selected. This incentive structure encourages miners to compete and guarantee the security of the network as more hash power is fed into the system.&#x20;

To improve hashing performance, miners invest in specialised hardware in a bid to outperform other miners. While this behaviour contributes to the security of the network, small miners are outcompeted leaving the mining ecosystem to be run and controlled by people who are wealthy enough to acquire and maintain specialised hardware.

Ellcrys is working to create a more inclusive mining community where people with the means to run specialised hardware and those who aren't that fortunate to be able to work together to provide security to the network and also receive rewards.

### Symbiotic Mining

Symbiotic mining refers to a process where miners are unable to cause the generation of new coins without the assistance or contributions of other parties.&#x20;

Today, miners in proof-of-work cryptocurrencies do not need other participants; They continue to pumping more hash power into mining and receive rewards for creating new blocks while others gain nothing. This promotes miner centralisation and an unfair distribution of the underlying cryptocurrency.

Ellcrys symbiotic mining involves non-miner participants providing the ingredients or raw material that a miner needs in other to create new coin and rewards. Without this ingredient, the miner can create blocks but will have transaction fees as the only source of incentive.

### PeopleMint

PeopleMint is the symbiotic mining protocol we are developing. It involves the conversion of banknotes (or currency notes) into new coins.

Non-miners scan their national banknotes in a transaction and wait for it to be mined, validated and generate new coins. Miners must collect these types of transactions, perform on-chain validation and add to a block. Miners must include these transactions in their blocks if they wish to create another source of reward beyond transaction fees.

Scanned and mined banknotes do not outrightly generate new coins. They must be validated by off-chain validators (bettors) who stake coins to assert the validity of a banknote in global prediction competition. Off-chain voters who vote wrongly will have their stake slashed.

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The wisdom of the prediction community determines the correctness of a banknote.
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When a banknote has been successfully validated on-chain by miners and off-chain by bettors, the rewards are shared between miners, scanners and bettors. One thing to note is that reward is asynchronous; Miners' assurance of a reward after mining a block is weak as they may have included invalid banknotes or a banknote is yet to receive enough votes to decide its correctness.

To learn more about PeopleMint, please read the [whitepaper](https://storage.googleapis.com/ellcrys-docs/PeopleMint.pdf).
