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Consensus Algorithms in Blockchain
Consensus Algorithms in Blockchain - Flow Card Image

Consensus algorithms are critical for maintaining the security, reliability, and trust in a Blockchain network. These algorithms enable the decentralized network to agree on the state of the distributed ledger, ensuring that every transaction is verified without a central authority. Different consensus algorithms cater to various needs and have distinct methods for achieving consensus.

Types:
1. Proof of Work (PoW)
- Requires computational power to solve complex mathematical puzzles.
- Used by Bitcoin; involves solving cryptographic puzzles.
- Secure, well-established method; ensures all transactions are legitimate.
- Miners compete to solve puzzles, and the first to solve gets to add the next block. This process is energy-intensive and requires significant computational resources, making it secure but also costly in terms of energy consumption.

2. Proof of Stake (PoS)
- Validators lock up coins as stakes.
- Used by Ethereum; reduces the need for expensive hardware.
- Economic incentives to maintain the network's integrity; less energy consumption.
- Validators are chosen based on the number of coins they hold and are willing to "stake" as collateral. The more coins staked, the higher the chance of being selected to add the next block. This system encourages holding and reduces the risk of centralization.

3. Delegated Proof of Stake (DPoS)
- Users delegate votes to validators.
- Rewards distributed to delegators; democratic process.
- Efficient and democratic approach to consensus; lower entry barriers.
- Users vote for a small number of delegates to validate transactions and secure the network. Delegates are trusted with maintaining the network, and the system can process transactions quickly due to the limited number of validators. Delegators receive a share of the rewards.

4. Proof of Burn (PoB)
- Validators burn coins to gain mining rights.
- Long-term commitment required; coins are sent to an irretrievable address.
- Avoids hardware investments but still resource-intensive; adds value by reducing circulating supply.
- Validators "burn" coins by sending them to a verifiable but unspendable address. The more coins burned, the higher the chances of being selected to mine the next block. This mechanism demonstrates a long-term commitment to the network.

5. Proof of Capacity
- Requires hard drive space.
- The more space, the higher the chances of mining.
- Uses available storage instead of computational power; energy-efficient.
- Validators store large amounts of data on their hard drives. The amount of storage allocated determines the chances of mining the next block. This method leverages unused disk space, making it more environmentally friendly than PoW.

6. Proof of Elapsed Time (PoET)
- Fair chance for all validators based on wait time.
- Used in permissioned networks; fair selection process.
- Fair and transparent selection process; prevents domination by any single validator.
- Each validator waits for a randomly assigned time period. The validator with the shortest wait time gets to create the next block. This method ensures a random and fair selection of validators, promoting decentralization and fairness.

Resources:
https://tinyurl.com/ydrs4wb6
https://tinyurl.com/yxvhtwnv
https://tinyurl.com/5fp63dau

Categories : Computer Science

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