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Consensus Mechanisms in Blockchain
In this tutorial, we are going to learn about the types of consensus mechanisms in Blockchain.
Submitted by Vaishnavi Srivastava, on January 22, 2022
Consensus Mechanisms
A central administrator has the authority to maintain and update any centralized system, such as a database containing critical information regarding a country's driving permits. Any updates such as adding, deleting, or amending the names of those who qualify for various licenses are handled by a central authority, which remains solely responsible for maintaining accurate data.
Decentralized, self-regulating public blockchains operate on a global scale without relying on a single authority. They entail contributions from hundreds of thousands of people who work on the blockchain's verification and validation of transactions, as well as block mining.
In light of the blockchain's constantly changing status, these publicly shared ledgers require an efficient, fair, real-time, functional, reliable, and secure mechanism to ensure that all transactions on the network are authentic and that all participants agree on the ledger's status. The consensus mechanism, which is a system of rules that determines the legality of contributions made by the various participants (i.e., nodes or transactors) of the blockchain, performs this crucial role.
A consensus mechanism is a fault-tolerant mechanism used in computer and blockchain systems to achieve the necessary agreement among distributed processes or multi-agent systems, such as cryptocurrencies, on a single data value or a single network state. It's useful for keeping track of items, among other things.
Types of Consensus Mechanisms
Following are the most popular types of consensus mechanisms:
1) Proof of Work (PoW)
The original consensus algorithm in a blockchain network is Proof of Work (PoW). The algorithm confirms the transaction and adds another block to the chain. Minors (a group of people) compete against each other to complete the network transaction in this method. Mining is the process of competing against one another.
2) Proof of Stake (PoS)
The original consensus algorithm in a blockchain network is Proof of Work (PoW). The algorithm confirms the transaction and adds another block to the chain. Minors (a group of people) compete against each other to complete the network transaction in this method. Mining is the process of competing against one another.
3) Proof of Concept (PoC)
Simply, the blockchain Proof of Concept is the process of proving that a concept has real-world value. Its goal is to figure out if the project is feasible and will run smoothly. This can be done as a prototype or as a Minimum Viable Product (MVP).
Some other types of consensus mechanisms are PoA, PoB, PoET, and PoH.
The Decred blockchain's Proof of Activity (PoA) is a hybrid that incorporates elements of both PoW and PoS. Proof of Burn (PoB), requires users to send small amounts of money to inaccessible wallet addresses, thereby "burning" them out.
Another, named Proof of History (PoH), is similar to Proof of Elapsed Time (PoET) in that it cryptographically encodes the passage of time itself to establish consensus without using a lot of resources.
They are explained in detail below,
4) Proof of Activity (PoA)
Proof of Activity (PoA) is a blockchain method that uses a consensus mechanism based on identity as a stake to produce comparatively fast transactions. VeChain is the most well-known platform that uses PoA.
5) Proof of Burn (PoB)
POB is generally referred to be a POW system that does not waste energy. It works based on miners being able to "burn" virtual currency tokens. They are then given the ability to write blocks in proportion to the amount of money they have burned. Iain Stewart, the creator of the POB algorithm, compares burned coins to mining rigs to describe the method.
6) Proof of History (PoH)
We can use Proof of History to generate a historical record that proves an event happened at a specified period. A verifiable Delay Function is used to prove history.
7) Proof of Elapsed Time (PoET)
In PoET, each participating node in the network is required to wait for a predetermined amount of time, and the first node to fulfill the specified waiting time wins the new block. Each node in the blockchain network produces a random wait time and sleeps for that amount of time.