Great+Chain+of+Numbers+A+Guide+to+Smart+Contracts,+Smart+Property+and+Trustless+Asset+Management+-+Tim+Swanson

This Euler diagram shows two main systems, those currently part of a cryptoledger and those that are
not, which in this case is solely Open-Transactions (OT). 159 As noted earlier in the chapter, OT works by
connecting its OTX protocol to other services (much like SSL does with other databases) such as Bitcoin
and is therefore ledger agnostic.
Within the cryptoledger diagram are essentially two other distinctions, those that use a blockchain and
those that use a consensus ledger. At the time of this writing only the Ripple protocol uses a consensus
ledger. When it was first created, Namecoin was also originally its own independent blockchain but the
mining process has since merged with the Bitcoin ledger. The other independent blockchains above are
Litecoin, Dogecoin, NXT, BitShares and Ethereum. At the time of this writing, the Ethereum team has
not settled on which system it will use – it may use a hybrid approach similar to what Peercoin has done
(proof-of-work and proof-of stake).
Proof-of-work (PoW) involves a network of mining machines as originally employed by Bitcoin in 2009.
Computers are given a series of increasingly difficult benign math problems which they complete as a
way to stave off rogue attackers. In this example above, Litecoin, Dogecoin, Namecoin, Bitcoin and
potentially Ethereum use a proof-of-work method.
Proof-of-stake (PoS) is different in that the transaction node for a block is randomly assigned and all
network participants communicate directly with it. One advantage to this approach as it reduces the
amount of hashing power needed to secure the network. At the time of this writing, only NXT in the
above diagram uses a pure PoS method; Peercoin uses a hybrid and Ethereum may also use a hybrid as
well.
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