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How Decentralization Can Benefit Your Business: Evaluating Bitcoin, Hyperledger, Algorand, and Elixxir


DLTs: Somewhere Between Centralized and Decentralized


The History and Evolution of Proof-of-Work (PoW)


Performance Trade-offs Between PoS and DPoS

  • PoS establishes consensus by minting blocks based on staking cryptocurrency claims for the right to validate blocks, instead of mining blocks to establish consensus with a block reward. Staking is another way of having skin in the game. Importantly, the value generation of PoS blockchains cannot be bootstrapped like PoW, where mining organically creates value via block rewards. Instead, value must be pre-established by way of ICO, STO or Airdrop. This means that the security considerations of PoS vary and can be gamed in ways that PoW cannot.
  • In PoS, the authority to mint the next block is based on factors like stake — the amount of cryptocurrency collateral a participating member wagers for the right to validate blocks — and additional attributes like the duration of time that a wager is staked or the length of a staker’s hash value. Whereas PoW can run into unintended consequences like greedy miners that affect centralization and governance decisions, PoS blockchains suffer different vulnerabilities such as bad actors who can target the users wagering stake in order to change the outcome of the blocks minted. The tradeoffs for PoS are less security for increased speed and scalability.
  • DPoS establishes consensus in a similar way to PoS. What differs is the method of randomization in governance. In DPoS, a select few delegates are in charge of governing blockchain parameters. They get to oversee blockchain governance decisions but do not oversee voting on transaction validation or block production. Users vote to choose witnesses, who vote on validating transactions, block production, and choosing delegates by using stake. Delegates rotate over time to ensure the health of the blockchain.
  • In DPoS, security is akin to a liquid democracy, governed by the actions of voters and voting machines. Like democracies, DPoS can be gamed at the social layer and authority can be concentrated to a select few. So, the advantages of speed, latency, and throughput can be offset by bad actors in DPoS. The result is a different type of risky centralization.

Next-Gen Consensus Algorithms




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