Demystifying Blockchain — Part-3 (How Consensus Mechanisms Shape Blockchain Performance)

Note : If you didn’t read the Part-1 & Part-2 of demystifying blockchain series, Check that out here “Anatomy of Blockchain” , “How a Blockchain Transaction works”.

As we previously stated, consensus mechanisms are a crucial part of a blockchain system and have a significant impact on its functionality. They help nodes come to a consensus over the truthfulness of transactions and the adding of new blocks to the blockchain. The following are some of the most popular consensus mechanisms used in various blockchain networks:

Proof of Work (PoW)

The initial Bitcoin blockchain consensus algorithm was PoW. In a proof-of-work (PoW) network, nodes compete to solve a cryptographic challenge in order to add new blocks to the blockchain. The first node to solve the puzzle receives money, and the new block is then added to the chain. Although PoW is decentralised and safe, it is sluggish and expensive because to the high energy and compute requirements.

Proof of Stake (PoS)

Based on the amount of cryptocurrency they have or stake, PoS nodes on the network are selected to validate transactions and add new blocks to the blockchain. The likelihood of a node being selected to validate transactions and get rewards is higher for nodes with higher stake. PoS is more energy- and computationally-efficient than PoW, but it can also be less decentralised and more open to attacks from nodes with high stakes.

Delegated Proof of Stake (DPoS)

In DPoS, fewer nodes are chosen through a voting process to act as block producers than in PoS, which allows all nodes on the network to validate transactions and generate new blocks. Although DPoS is quicker and uses less energy than PoW and PoS, it is still vulnerable to vote buying and centralization.

Proof of Authority (PoA)

The PoA protocol selects a group of trusted nodes to verify transactions and add new blocks to the blockchain. Nodes are selected based on their track record and capacity to deliver dependable service. PoA depends on just a few trustworthy nodes, but it is quick and energy-efficient.

Proof of Elapsed Time (PoET)

Some private blockchain networks use the PoET consensus process. In PoET, nodes on the network fight for the right to be selected based on a random wait time to validate transactions and add new blocks to the blockchain. The block is added by the node with the quickest wait time. PoET is both secure and energy-efficient, but it is also more centralised and dependent on a reliable computing environment.
These are only a few of the consensus mechanisms that are most frequently utilised in blockchain networks. Each is ideal for various use cases and applications and has strengths and shortcomings of its own.

PoW vs. PoS: Who Wins The Duel?

One of the main topics of discussion is which consensus mechanism — Proof of Work (PoW) or Proof of Stake (PoS) — is superior. We can attempt to delineate some of the primary distinctions between PoW and PoS, but ultimately the decision about the consensus mechanism depends on the particular requirements and objectives of the blockchain network.

Lets us see about “ The Evolution of Blockchain Architecture and How It Affects Performance “ in the next part. Please share the blog if you feels it is really help full. Thank you.