What is Kaspa and how does it work?

What is Caspar?

Kaspa is the fastest, most scalable, open-source, decentralized, and instantaneous confirmation transaction layer based on the Proof-of-Work (PoW) consensus mechanism. Kaspa integrates the BlockDAG (Block Directed Acycling Graph) architecture, a digital ledger that enables parallel blocks and instant transaction confirmation.

Kaspa is known for its fastest transactions. Kaspa’s innovative blockDAG architecture allows transactions to be instantly added to the distributed ledger. Kaspa also follows the GhostDAG/PHANTOM protocol, which adheres to the principles of the Satoshi Nakamoto Consensus, and so does Bitcoin. Kaspa therefore has all the benefits of Bitcoin, including no deflation, decentralization, and no pre-mining.

Simply put, Kaspa transactions are faster than traditional cryptocurrency transactions like Bitcoin, at around 1 block per second, but are just as secure as Bitcoin transactions due to the PoW mechanism. Kaspa is also currently working on a language rewrite to increase the number of blocks per second. This will eventually drive the development of smart contracts and Decentralized Finance (DeFi).

How does Caspar work?

Unlike traditional blockchains, Kaspa leverages the innovative blockDAG architecture to facilitate the fastest, most scalable, secure and decentralized transactions. Let’s take a closer look at how Kaspa works and how the blockDAG architecture makes it different from other existing cryptocurrencies.

Kaspa transactions are relatively faster than traditional cryptocurrencies such as Bitcoin and Ethereum. For example, existing blockchains are speed limited due to their inefficient design. Kaspa’s blockDAG architecture supports fast sub-second confirmations, meaning instantaneous transaction confirmations.

Cryptocurrency transactions are stored in blocks on the blockchain. A network of nodes validates these transactions by analyzing the credentials of the sender and receiver. Existing blockchains have slow confirmation times. Kapsa eliminates confirmation bottlenecks, ensuring transactions take less than 1 second. Verification times are expected to decrease further after the Rust update.

Scalability has always been a question mark for cryptocurrencies. If many users trade simultaneously, the system may become congested or slow down. Kaspa’s blockDAG architecture manages a significant amount of transactions simultaneously, at an average rate of 1 block per second. This allows Kaspa to process numerous transactions in less time.

Kaspa follows KHeavyhash, a PoW-based consensus algorithm that is highly efficient and supports decentralization. KHeavyhash algorithm allows higher hashing power per watt compared to other PoW algorithms such as SHA-256, ETHash, etc. Additionally, Kaspa is more secure and energy efficient than other PoW blockchains.

Kaspa follows the KHeavyhash algorithm, which inherits all the security features of SHA-256. Therefore, blockDAG is secured by a decentralized node network like Bitcoin. Miners around the world verify and secure the network without central governance.

Kapsa utilizes the blockDAG architecture where transactions are sorted by time and recorded in sealed blocks. The architecture represents blocks and edges by referencing child/parent blocks, promoting scalability, high throughput, instantaneous confirmation, and decentralization.

How does Kaspa solve the Trilemma problem?

Traditional cryptocurrencies such as Bitcoin and Ethereum suffer from three major problems: security, scalability, and decentralization. Kaspa effectively solves this trilemma problem by leveraging the blockDAG architecture and GhostDAG protocol.

Before moving on to Kaspa, let’s look at the trilemma problem that cryptocurrencies face. Existing cryptocurrencies must limit block creation times to limit orphans. A high orphan rate reduces network defenses and compromises security. Kaspa solves this problem using the GhostDAG protocol, which integrates Nakamato’s chain into a directed acyclic block graph called blockDAG.

The GhostDAG protocol allows Kaspa to outperform existing cryptocurrencies by increasing blocking speeds and enhancing security. As a result, Kaspa improves security and throughput by 51%, to around 1 block per second.

Here’s how Kaspa overcomes the trilemma problems faced by existing cryptocurrencies.

1. Fastest confirmation

Existing cryptocurrencies have a slow blocking speed and correspondingly slow confirmation speed. Kaspa’s consensus layer allows for fast and instant confirmation, making Kaspa transactions even faster. This makes Kaspa ideal for applications that require fast proof of publication.

2. High throughput

Existing cryptocurrencies have low transaction throughput due to slow block speeds. With the GhostDAG protocol, Kaspa’s consensus layer increases block rate and block size to enhance high throughput. Additionally, Kaspa optimizes bandwidth costs and network infrastructure for optimal throughput.

3. Mining decentralization

Existing cryptocurrencies have slow block speeds, so mining profitability may be unevenly distributed. Simply put, irregular mining rewards are because blocks are difficult to find. Miners therefore join larger mining pools to combine significant computing power.

However, as more miners join the network, mining difficulty increases, concentrating consensus power in the hands of a few authorized people, such as mining pool managers. Kaspa’s consensus layer supports fast block rates and distributes mining income evenly, contributing to mining decentralization while reducing incentives to participate in mining pools.

Caspian Sea Price History

Analyzing Kaspa’s past price movements can help you make informed decisions regarding mining or investing in Kaspa.

As can be seen from the graph, Kaspa shows positive signals with upward price movement.