Meow. Consensus algorithms that change decentralized reality: Proof-of-Importance (PoI), Proof-of-Capacity (PoC), CDCA (Credits Decision Consensus Algorithm).
In the era of digital world development, the general principle of the interaction between participants is a special system, the foundation of which is a chain of nodes participating in the process of transactions validation and a blockchain network formation. The network requires a stable operability of each of the nodes, verifying of each other’s actions and therefore reaching the consensus.
What is the consensus algorithm?
The consensus algorithm is a set of specific mathematical rules and laws that regulate the work of the blockchain and determine the process of group decision making.
The mechanism of consensus determines:
- The frequency of new blocks generation
- Remuneration for the generated block
- Validation of chain genuineness
At the moment, the most popular types of consensus used in various fields of digital industry are Proof-of-Work (PoW) and Proof-of-Stake (PoS). However, the shortcomings of these traditional consensus algorithms, such as the consumption of a huge amount of electrical resources during currency mining, which has a tremendous impact on the global environment, expensive entry point, that makes the network more centralized, as miners with more expensive equipment have a lot of resources that stimulate the growth of manipulative actions and lack of motivation for consensus participants led to the creation of more advanced types of consensus, which form the basis for the new generation of blockchain platforms.
Proof-of-Importance (PoI)
PoI is used by NEM blockchain platform. — nem.io
Nodes are selected to verify transactions based on their comparative importance as perceived in the network.
Similar to how Proof of Stake works, the nodes/participants have to “stake” a certain amount of their cryptocurrency in order to verify transactions.
However, in the POI model, other factors that prove “importance” are also considered. Among them are: account balance, quality and speed of transactions completion.
Nodes that show the most “importance” judging by these factors are then permissioned to verify transactions. However, it is important to note that even accounts with minimal balances can also be permissioned to verify transactions based on the quality of their previous work. This approach motivates users not only to keep funds in their account, but also to actively use them.
The POI system is an energy saving algorithm as it does away with the complex verification process. This can be viewed as an upgrade from both the Proof of Work and Proof of Stake algorithms.
Proof-of-Capacity (PoC)
Proof-of-Capacity is a brand new mining algorithm that is currently being used by one cryptocurrency called Burstcoin.-burst-coin.org
Proof-of-Capacity is a consensus algorithm where miners “plot” their hard drives in order to take part in transaction verification. In other words, the miners compute and store the solutions to the mining problems before the mining even begins.
There will be some solutions that will be achieved faster than others and these will be the ones that are chosen in the consensus round. These miners will be awarded the block and hence the coins applicable to that.
These solutions have to be calculated beforehand as they are too complicated to solve in real time. Moreover, the block times are very short at an average of 1 block every 4 minutes (compared to Bitcoin’s 10 minutes). This is why the solutions to the hashing algorithm must be saved in advance.
There are two components that make up the Proof-of-Capacity: Plotting and the mining on the hard drive.
The only way to increase chances of winning the block reward is to have the most solutions (plots) saved on their hard drives before hand. This will increase the chances of your solution being the fastest.
The basic idea to take away from this is that in PoC the “work” is done once during plotting rather than with each new block, allowing PoC to realize a huge efficiency savings over PoW systems.
CDCA (Credits Decision Consensus Algorithm)
CDCA is consensus algorithm used by Credits blockchain.-credits.com
It is a combination of two mechanisms — the Delegated Proof-of-Stake (DPoS) algorithm and the Byzantine Fault Tolerance (BFT) algorithm. DPoS, which is a modification of the more common Proof-of-Stake algorithm, provides differentiation of voters and validators. The Byzantine Fault Tolerance, shortly BFT, implies voting protected against malicious activities. The consensus in the CREDITS network is split into several phases, with key ones encompassing the selection of a head node and trusted nodes, the voting of selected nodes, ledger recording protected against malicious hackers. In addition, it doesn’t require mining which makes this consensus algorithm more energy efficient and ecology friendly than the most cryptocurrencies on the market.
Consensus protocol on Credits platform:
1)Selection of head and trusted nodes (DPOS):
-Checking last block hash
-Creation of proper nodes list
2)Transaction voting procedure (BFT)
-Creation of transaction list and sending it to trusted nodes
-Generation of verified transactions list and exchange between trusted nodes
-Final verified transaction list creation
3)Protection against ledger recording by a malicious nodes (BFT)
-Creation of a new block
-Sending new data to all network participants then back to Point 1.
It is worth noting that the CREDITS platform entails multiple stages of thorough selection and verification of both trusted and head nodes, round-based voting system, sophisticated verification of transactions, a fail-safe system of data recording onto a ledger. These solutions enable the algorithm to offer a proper level of network reliability, accurate decision-making, prevention of errors and abusive practices. In-house consensus mechanism based on a combination of DPoS and BFT is more effective than reliance upon any given ready-made solution or any of the above methods used individually.
Conclusion
The presented consensus algorithms might be used separately for diffrent kind of tasks. Nem and Burstcoin are good for P2P-dealing and CREDITS is good for Corporations which work with Big amounts of Data and need a secured blockchain-backend.
