What is a blockchain consensus algorithm and how many types are there?

 The consensus algorithm is one of the most important processes in blockchain networks. Consensus is now making a difference in many projects. The difference between Atrium and Atrium 2, with all its updates and talk, is simply in changing the mechanism from proof of work to proof of stock. All the objections to Bitcoin regarding energy consumption still come from the water consensus mechanism. Join us on CoinMarketSIG to get acquainted with its types.

 

What is a blockchain consensus algorithm?

In simple terms, the blockchain consensus algorithm is the way in which all the counterparts of a blockchain network reach a common agreement or consensus on the status of the distributed general office in real time.

The blockchain network consensus mechanism enables it to establish security in the blockchain environment while building trust and confidence between the various nodes. This is why the consensus mechanism is a vital part of any blockchain program development guide and any decentralized program project distributed in the office environment.

These algorithms work based on different goals, some of which we will discuss in the next section of this article.

Objectives of the blockchain consensus mechanism

The followings are the objectives of blockchain consensus mechanism:

Single agreement

One of the main goals of consensus mechanisms is to reach a single agreement. Unlike centralized systems where trust is required, users can operate in a decentralized manner even without trusting each other. The protocols used in the distributed blockchain network ensure that the data involved in the process is accurate and the public office status is up to date.

Setting economic incentives

When it comes to creating an unreliable system that automatically adjusts, it is essential to adjust and align the interests of the participants in the network. In these situations, the consensus blockchain protocol rewards participants for good behavior and punishes bad actors. In this way, the protocol also regulates the economic incentives of the participants.

Being fair and equal

Consensus mechanisms allow anyone to participate in the network and use the same basic principles. In this way, the open source and decentralized nature of the blockchain system is proven.

 Avoid double spending

Consensus mechanisms work on the basis of specific algorithms, which only include transactions in a transparent public office that are approved and valid. This approach solves the traditional problem of double-spending digital currency.

Fault tolerance

Another feature of the consensus method is that it ensures error tolerance, stability and reliability of the blockchain. This means that the controlled system works indefinitely even in the event of failures and threats.

There are currently many blockchain consensus algorithms in the digital currency ecosystem, and many more are entering the market. This booming market makes blockchain development companies and aspiring entrepreneurs must be familiar with the determinants of a good consensus protocol and the potential impact of having a weak one. Now that you are familiar with the basics of blockchain consensus methods, let’s take a deeper look at the common types of consensus mechanisms.

Types of blockchain consensus algorithms

Here you can gain some information about types of blockchain consensus algorithms:

1. Proof of work (PoW)

The proof-of-work mechanism developed by Satoshi Nakamoto is the oldest consensus mechanism used in the field of blockchain. This mechanism is also known as the mining algorithm, in which the participating nodes are called miners.

In this mechanism, miners must solve complex mathematical puzzles using high computational power. They use a variety of mining methods such as graphics card mining, CPU mining, ASIC mining, and FPGA mining. Anyone who solves the problem sooner will receive an extraction reward.

However, the extraction process is not that easy. Each puzzle can only be solved by trial and error. In addition, the level of complexity of the puzzles increases as the blocks are extracted. Therefore, one has to create a new block in a certain period of time to cope with the difficulty level.

The proof-of-work mechanism is used in many digital currencies such as Bitcoin, Litecoin, Zcash, Primecoin and Monero.

The Bitcoin algorithm uses a random nonce value to change the output of the hash value. In the Bitcoin consensus algorithm, each block must generate a certain amount of hash, and nonce is the parameter used to generate that amount of hash.

In terms of implementation, the proof-of-work algorithm has affected not only the financial industry, but also healthcare, governance, management and more. In fact, proof of work has made it possible for multi-channel payments and multi-signature transactions at the same address to increase security.

2. Proof of stock (PoS)

Proof of stock is the most fundamental and environmentally friendly alternative to the proof of consensus protocol.

In this blockchain method, the producers of the blocks are no longer miners but have the role of validator. In this way, they can approve new blocks and save energy and time. However, to become a creditor, one must invest some money or stock in the platform.

Also, contrary to what happens in proof of work, in proof of stock miners can take transaction fees because in this algorithm there is no reward for reaching consensus.

This feature generally encouraged brands such as Ethereum to upgrade their Ethereum 2.0 model from proof-of-work to stock-proof. Proof of stock also helped various blockchain ecosystems to function properly.

Although the stock proof method solved various problems that already existed in proof of work, there were still many challenges in this area. To address these challenges and create an advanced blockchain environment, several different types of stock proof mechanisms were developed.

The two most popular types of stock proof are the methods of stock proof and the proof of rented stock.

Delegated Proof of Stake (DPoS)

In the method of proving the assigned shares, the participants stick their shares (stocks) and based on the amount of shares they have stuck, they can vote for a certain number of representatives. For instance, a user who has doubled the number of other quin stick users will have more voting rights. Agents also receive rewards in the form of transaction fees or a certain amount of coins.

Due to the existence of this voting mechanism commensurate with the tagged shares, the assigned stock proof algorithm is one of the fastest blockchain consensus models and has many supporters as a digital democracy. Some of the real uses of this blockchain consensus mechanism include Steam, IAS, and BitShears.

Legal process outsourcing companies (LPOs)

Rental stock proof is an advanced version of the stock proof consensus mechanism that works on the Waves platform. Unlike the conventional stock proof method, in which each node with a cryptocurrency value can add the next block to the blockchain, in the lease method, users can lease their account balance to full nodes.

The user who leases more assets to the full node has a better chance of creating the next block. The lessor also receives a percentage of the transaction fee collected by the full node as a reward.

This type of stock proof is an efficient and secure way to develop public digital currencies.

3. Proof of authority

Validation is a modified version of the stock proofing method in which the identity of network validators is stuck. In this method, to verify the identity, his declared identity is compared with his real identity in his official documents. Simply put, these credentials are based on their credibility on the web.

In a validation algorithm, nodes (which are validated) are the only factors that allow new blocks to be generated. Validators who have tagged their identities are encouraged to secure and safeguard the blockchain network. In this method, the number of validations is relatively small, about 25 or less.

4. Byzantine Fault Tolerance (BFT)

Byzantine Fault Tolerance, as its name implies, is used to counter Byzantine error (also called the issue of Byzantine commanders). In such a situation, the actors in the system must agree on an effective strategy to prevent a catastrophic disruption in the system.

The two main consensus models of Byzantine error tolerance in the field of blockchain include practical byzantine fault tolerance (PBFT) and Delegated Byzantine Fault Tolerance (DBFT).

 

Practical byzantine fault tolerance (PBFT)

The practical Byzantine fault tolerance method is a lightweight blockchain algorithm that solves the problem of Byzantine commanders. The problem-solving process is such that the algorithm allows users to validate the messages delivered to them by performing calculations and evaluating the decision about the validity of the message.

The user then communicates his decision to the other nodes, which ultimately decide on it. In this way, the final decision is made based on decisions made from other nodes. Stellar and Ripple are some of the uses of this blockchain consensus mechanism.

Delegated Byzantine Fault Tolerance (DBFT)

The assigned Byzantine error tolerance mechanism introduced by the Neo project works similar to the consensus model of proving the assigned shares. In this model, neo token holders also have the opportunity to vote for the delegates.

However, this method does not depend on the amount of assets invested. Anyone who has the basic conditions, i.e. authentication, appropriate equipment and 1000 people can be a representative. One of these representatives is then randomly selected as the spokesperson.

The spokesperson creates a new block of transactions awaiting approval. He also sends a proposal to the elected representatives who are responsible for monitoring all transactions and registering them on the network.

These representatives have the authority to check the accuracy of the data and the honesty of the speaker by sharing and analyzing suggestions. If two-thirds of the delegates confirm the accuracy of the information, a new block will be added to the blockchain.

This type of consensus blockchain protocol is also called “Ethereumchain” and can be a useful resource for creating a “smart economy” by digitizing assets and providing smart contracts in the blockchain.

5. Directed Acyclic Graph (DAG)

Another basic yet basic blockchain model that every mobile application developer working with blockchain should be familiar with is the non-circular directional graph.

In this type of blockchain consensus protocol, each node replaces the “miners”. In this case, when the miners are removed and the transactions are approved by the users themselves, the transaction fee becomes zero. Verifying transactions between the two nearest nodes is easier, and the whole process becomes lighter, faster, and more secure. The best example of a non-circular directional graph algorithm is the Iota and Hedra hash project.

Although the above are the most important models of consensus in the development environment, we are currently witnessing the gradual rise of several different blockchain consensus mechanisms, including the following:

6. Proof of Capacity (PoC)

In this mechanism, solutions to any complex mathematical puzzle are stored in digital storage locations such as hard disks. Users can use these hard disks to generate blocks, so that those who can evaluate solutions faster have a better chance of creating blocks.

This process is called plotting. The two cryptocurrencies that use the capacity consensus protocol are called Burstcoin and SpaceMint.

 

7. Proof of burning (PoB)

This model is designed to save energy as an alternative to proof-of-work and stock-proof methods, works on the principle that miners destroy or so-called burn their cryptographic tokens. By doing so, they can create new blocks commensurate with the coins they have burned. Obviously, the more coins Miners burn, the better their chances of writing a new block.

But to burn coins, miners must send it to an address that cannot be used (these coins cannot be used to verify blocks).

This method of consensus is widely used in distributed consensus. The best example of using this mechanism is Slimcoin.

8. Proof of Identity (PoI)

The concept of proof of identity is just as valid as the method of identity. Authentication is actually the encrypted authentication of users’ private keys that is attached to each specific transaction. Each identified user can create and manage a block of data that can be shared with others on the network.

In this blockchain consensus model, the authenticity and integrity of the generated data is guaranteed, and therefore proof of identity is a good choice for introducing smart cities.

9. Proof of activity (PoA)

The activity proof method is basically a hybrid approach designed by integrating proof of work and stock proof consensus models.

In the mechanism of proving the activity of miners, they compete to solve the encrypted puzzle at the first opportunity using advanced hardware and high power energy, such as the method of proving work. But the similarity of this method with the stock proof mechanism is that the blocks encountered by the miners contain only information about the identity of the winner of the block and the reward of the transaction.

Validators (shareholders appointed to verify transactions) test and guarantee the accuracy of the block. Validators activate a block that has been repeatedly checked into a complete block. This confirms that the transactions are reprocessed and eventually merged into the new block. In addition, the block reward is divided into different quotas among the creditors.

Espers and Decred ciphers are two real examples of implementing this mechanism.

10. Proof of Elapsed Time (PoET)

The method of proving the time spent by Intel was introduced with the aim of capturing the encrypted riddles in the mechanism of proving the work; Intel believed that the CPU architecture and the quantity of mining hardware knew when and how often a miner would win the block.

This method is based on the view of fair distribution and increasing the chances of winning the block for most participants. As a result, in this method, each participating node is asked to wait for a specific time to participate in the next extraction process. The member with the shortest setup time is asked to provide a block.

At the same time, each node calculates it’s waiting time and then goes to sleep.

Finally, once a node is activated and the block of that node is available, it is known as the “lucky winner”. This node can then spread the information across the network while maintaining the network decentralization feature and receiving rewards.

11. Proof of importance (PoI)

The method of proving the importance is a kind of stock proving protocol that considers the role of shareholders and accreditors for its performance. However, the choice of credentials is not based solely on the size and chance of their stock. Various other factors such as reputation, overall inventory and the number of transactions made through each particular address also play a role in their selection.

Attacking consensus-based networks proves costly, and such networks reward network security users. Based on the above information, you can compare different blockchain consensus protocols and find out their differences. However, read the next section carefully for more convenience and to understand the features of a good consensus method.

Characteristics of a good blockchain consensus mechanism

Here are the characteristics of a good blockchain consensus mechanism:

1. Safety

In a good consensus mechanism, all nodes are able to produce valid results in accordance with the rules of the protocol.

2. Inclusion

In a good consensus blockchain mechanism, all network nodes have the opportunity to participate in the voting process.

3. Being participatory

A good consensus mechanism is a mechanism in which all nodes actively participate and are involved in updating databases in the blockchain.

4. Equality

Another feature of a good mechanism is that it gives equal value and weight to all the votes received from each ninety.

With that in mind, let’s see what happens if you do not take these factors into account and apply a weak consensus model to your development process.

Consequences of opting a bad consensus protocols

1. Blockchain forks

Choosing the blockchain consensus method increases the vulnerability of the chain. One of the vulnerabilities that blockchain enthusiasts and developers face is blockchain forks.

Fork blockchain is simply a situation or situation in which a single chain is divided into two or more separate chains.

Once the fork blockchain is created, the program starts unpredictably, creating two or more separate nodes.

2. Poor performance

If the blockchain mechanism is used, a bad consensus or node will not work properly or there will be a problem due to network splitting. These problems delay the message exchange process between nodes and increase the program latency, which ultimately weakens network performance.

3. Disruption of consensus

Another effect of using bad consensus mechanisms in the business model is to disrupt consensus. Under these circumstances, some of the nodes cannot participate in any process and therefore, in the absence of their votes, consensus cannot provide accurate and desired results.

In conclusion

The consensus mechanism is one of the foundations of the world of digital currencies, which has become an excuse to criticize each other’s projects. Proof of stock and proof of work are two common types of consensus, each with their own advantages and disadvantages, used by the currencies Bitcoin and Ethereum 2.

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