Definition, Characteristics, Pros and Cons of Blockchain Consensus Algorithm

Crypto Core Technology Consensus Algorithm Types, Definitions, Features, Pros and Cons

What is Blockchain Consensus Algorithm?

The consensus algorithm is essential for integrating the blockchain business environment and technology.

A miner or verifier is necessary in a public blockchain to store data in blocks through the consensus process amongst dispersed nodes.
Participants (miners) are needed to validate the block chain for decentralization, and different fee schemes to share mutual gains are an essential direction of the consensus method.

The many consensus proof approaches have been summarized. Recently, consensus based on network contribution seems to be taking a new turn.

Types of consensus algorithms and their advantages and disadvantages

PoW (proof of works)

– In an economy where currency, such as Bitcoin, are mined, a reward is granted if the password is computed and matched with a miner.
A way in which miners with computational capabilities benefit from large-scale mining devices such as Bitcoin (BTC) and Ethereum (ETH). Advantages: Anyone may participate. Disadvantages: expensive mining costs (equipment and energy use), Hashrate monopoly, and centralization issue

PoS (Proof of stake)

– By distributing the likelihood of engaging in hash verification (mine) in accordance to the amount staked (held) in the currency.
It is feasible to minimize mining and maintenance costs (electricity, infrastructure costs) and tackle the security issue caused by hashrate monopolies by mass miners – Ethereum 2.0 (ETH.2.0), Solana, Ada, Avalence, Tezos, Cello, Neo, and so on. Advantages: There is no need for mining hash power, and the currency is environmentally benign.
Energy savings over POW and high-speed maintenance are also achievable.
Increasing safety by decentralizing block producers. Disadvantages: Coins are kept to raise the stake, which reduces currency circulation and causes coin concentration (the rich get richer)
Maintaining initial currency distribution and POS node stability takes time.
Concerns about persons with significant stakes purposely messing with transaction verification

PoA (Proof of Authority)

To compensate for the inadequacies of POS and centrally govern it, a technique of verifying the inactivity of transactions and preserving and constructing blocks by an account (node) authorized by an authorised identity or validation check is used.
– The Stargram Coin (SGC)
Because it is difficult to expose trustworthy nodes to the network, this strategy is appropriate for private blockchain.
Because it detects and maintains nodes by mutual identification, it is unsuitable for public networks.
Adapted from the corporate private blockchain
Benefits of fast speed and security

POB (Proof Of Believability)

In a POS-derived version, in addition to the stake holding the coin, the node’s trust index (Believability) is taken into account, and the privilege to verify the transaction in the node with the highest trust, as well as an incentive for verification payment, is granted.

Donations or contribution actions inside the coin’s community are used to gauge trust.
The dependability index vanishes after a set amount of time, and the monopoly of transaction verification is limited to avoid centralization, like in POS.

PoI (Proof of Importance)

– Appears to have addressed POS weaknesses such as limited liquidity.
– Proof of significance decides who on the network is qualified to contribute a block to the block chain. A reward is provided if a currency is retained in the wallet, similar to the proof-of-stake POS technique. Because contributions are weighted, the bigger the donation, the greater the incentive.
NEM (XEM): Cryptocurrency for each user’s smart asset system. In the case of the original NXT (POS), the more coins you have, the more wealth you collect, therefore NEM was built to alleviate the issue of diminishing currency circulation caused by individuals who own cryptocurrencies not trading and simply holding them. The greater the number of remittance transactions, the greater the incentives, and a fee of 0.01% of the completed transaction value is charged.

PoC (Proof-of-contribution)

Calculate contribution values depending on user activity and behavior in blockchain-based apps. The node with the greatest contribution value wins the privilege to generate the next new block in each consensus round.
Utilization: Existing blockchain-based IP protection solutions are generally built on public blockchain platforms like Ethereum or consortium blockchains, and they suffer from issues including high system requirements, significant consensus delays, and minimal user involvement.

POC (Proof Of Capacity, Proof Of HDD Capacity) A technique in which the remaining capacity of a hard drive is separated into specific units and shared over the network, with coins awarded based on sharing performance.
The more coins you may get, the higher the shared hard drive capacity.
– Storage (STORJ), Burst (SC)

PoA (Proof of Access)

A technique of obtaining bonus coins via social media activities such as promotion, suggestion, community involvement, prompt reimbursement, bug report, and so on – Salt

The types, characteristics, and strengths and weaknesses of blockchain consensus algorithms have been investigated.
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