Consensus Method Algorithms
We are going to read about different consensus methods, how they work, and needed details about them.
Note: I wrote this article in summary style, check for the source link for my main episodes on Blockchain.
A Consensus Method
A consensus mechanism is a mechanism that is used in computer and blockchain systems to achieve the necessary agreement on a decision in the respecting network (single data value or a single state of the network among distributed processes or multi-agent systems).
For example
On the Bitcoin blockchain, the consensus mechanism is known as Proof-of-Work (PoW), which requires the exertion of computational power in order to solve a difficult but arbitrary puzzle in order to keep all nodes in the network honest.
Note: A consensus mechanism refers to any number of methodologies used to achieve agreement, trust, and security across a decentralized computer network.
Or in other means
A consensus algorithm is a set of rules that rules a blockchain network. It is an agreement on the rules of a specific blockchain and how users can participate in the network.
Proof of work
- It is the consensus algorithm of the Bitcoin blockchain
- It eliminates the need for trust in a bank or the requirement for a third party during transaction processing
It is called “Proof of Work” because it requires some type of work — usually computer processing — from participating nodes (miners) in the Bitcoin network.
Proof of Stake
It is another common consensus algorithm that evolved as a low-cost, low-energy consuming alternative to the PoW algorithm. It involves the allocation of responsibility in maintaining the public ledger to a participant node in proportion to the number of virtual currency tokens held by it. However, this comes with the drawback that it incentivizes cryptocoin hoarding instead of spending.
Proof of Participation
The Proof of Participation consensus equally distributes decision power and rewards amongst every node contributing to a blockchain’s operation. This approach removes the link between decision power and resources, leads to better decentralization and fair rewards distributions.
Proof of Capacity
This algorithm is used in blockchains allows for mining devices in the network to use their available hard drive space to decide mining rights and validate transactions. This is in contrast to using the mining device’s computational power or the miner’s stake in the cryptocurrencies
Proof of Activity
Proof-of-Activity (PoA) is a blockchain consensus algorithm that facilitates genuine transactions and consensus amongst miners. That is a consensus algorithm combining proof-of-work and proof-of-stake. This consensus algorithm is designed to prevent attacks on the underlying Blockchain.
Proof of Burn
Proof of burn follows the principle of “burning” the coins held by the miners that grant them mining rights.
Proof of Elapsed Time
Proof of elapsed time (PoET) is a blockchain network consensus mechanism algorithm that prevents high resource utilization and high energy consumption and keeps the process more efficient by following a fair lottery system. The algorithm uses a randomly generated elapsed time to decide mining rights and block winners on a blockchain network. By running a trusted code within a secure environment, the PoET algorithm also enhances transparency by ensuring lottery results are verifiable by external participants.
Proof of Authority
Proof of Authority (PoA) is a reputation-based consensus algorithm that introduces a practical and efficient solution for blockchain networks.
