Skycoin has distributed consensus, even though Obelisk is not released yet

For the past few years, the Skycoin blockchain has been running on a protected masternode system while development progresses on Skycoin’s groundbreaking consensus algorithm, Obelisk, which will be released later this year (2019). Obelisk makes Proof of Work and Proof of Stake consensus algorithms obsolete, and is the biggest breakthrough in blockchain consensus for the past decade. Key aspects of the Obelisk code are kept in private GitHub repos, to prevent competitors from copying the code. However, many commits are public and can be found here: GitHub Skycoin Obelisk.

But because Obelisk has not been launched yet, competing projects claim Skycoin currently has no consensus. A frequent allegation is that the entire blockchain runs on an old PC in Synth's basement.

In reality, consensus is currently secured by a masternode system, which is a very reliable solution used by numerous crypto projects. As with all masternode-based crypto platforms, the masternode writes blocks into an immutable ledger which is synchronized with all nodes in the network.

Every Skycoin wallet contains a complete copy of the blockchain. Anyone with a wallet can send a transaction which creates a block that is written into the immutable ledger by the masternode and then synchronized with the thousands of other nodes in the network, creating a distributed consensus as to the state of the blockchain.

Since only the masternode writes blocks, Byzantine Fault Tolerance is not an issue and a traditional consensus algorithm or protocol (such as Proof of Work or Proof of Stake) is not currently required in order to secure this consensus.

Below is the code for Skycoin's blockchain and visor, demonstrating UTXO block verification across the distributed ledger. It shows that the blockchain is distributed throughout nodes that connect to each other in a peer-to-peer fashion.

https://github.com/skycoin/skycoin/blob/develop/src/visor/blockchain.go
https://github.com/skycoin/skycoin/blob/develop/src/visor/visor.go

A blockchain is an immutable data structure, and when the blockchains on each node are synchronized, a consensus exists regarding the state of the blockchain. Being an immutable data structure, it is not possible for even a centralized validator node to alter the transaction history without it being very obvious what has occurred.

Even if Obelisk was never released, Skycoin could continue to run quite successfully on this masternode system forever, without negatively impacting Skywire or CX or Skycoin Fiber or any other part of the Skycoin ecosystem. Other major crypto platforms use similar central controllers (for example IOTA).

There is less concern about centralization in the case of Skycoin because there is no mining, no transaction fees, and no block rewards in the protocol. This means a whole class of 'coin creation' attacks is eliminated. There is no way to create new coins. The worst thing a malicious block signer could do is attempt to slow down the system with multiple transactions. In the event the masternode is unavailable, new transactions simply won't be confirmed until the system is restored.

Some fudders suggest that Skycoin could use the masternode to alter account balances. While theoretically true, there is no obvious motive for doing this, as any such changes would be immediately obvious to all nodes on the network, and it would destroy faith in the project. After spending seven years developing the platform, it is inconceivable that the developers would deliberately destroy it.

This FUD is equivalent to saying "don't invest in Amazon because Jeff Bezos might choose to destroy his company". Yes, in theory any traditional company or cryptocurrency platform could potentially be destroyed by those who develop it, but the risk is very low.

Once the Obelisk consensus algorithm is launched later this year, consensus will instead be distributed across nodes in a Web of Trust. These nodes can run on almost any computer or operating system. There are approximately 10,000 Skywire nodes already deployed globally (as of February 2019), and any of these could also be configured as an Obelisk Web of Trust node when Obelisk is released.