A consensus algorithm in the blockchain is defined as a set of rules used by the nodes within a blockchain network to make it to an agreement on the state of the distributed ledger. The algorithms are designed to attain reliability in the network where multiple users or nodes are involved. Solving this kind of issue is termed as the consensus problem.
Why Consensus Algorithms Are Important In Blockchain Technology
There are several reasons to say consensus algorithms are important in blockchain technology, and they are;
- They are capable of providing security, ensuring valid transactions, and smooth network operation.
- Improved efficiency is facilitated by fast agree on transaction validity as well as adding new blocks to the blockchain efficiently.
- Decentralization is achieved by ensuring that all nodes fall to a consensus on transaction validity.
- Transactions on the blockchain can be viewed by everyone.
Important Points About The Consensus Algorithm
- The primary function of the consensus algorithm is to determine which node is capable of recording transactions and what are data included in a block.
- Helps to achieve decentralization. Decentralization means no single entity controls the system.
- Nodes solve the cryptographic puzzles or validate transactions, and it is added to the blockchain.
How Consensus Algorithm Works
The role of the consensus algorithm is to enable a set of distributed/replicated mechanics otherwise servers. This will work as a coherent group, and this is achieved by setting the algorithm at the threshold. Consensus algorithms are responsible for solving consensus problems. They assume that only some processes and systems will be unavailable, and communication will be lost during transmission.
A response of 51% from nodes is required to achieve a consensus on a data value. This implies consensus is executed with minimal resources, and this achieved algorithm maintains the integrity of decisions captivated by agreeing on nodes in the fault-tolerant system.
Types Of Consensus Algorithm
Blockchain algorithms are unique, which implies one blockchain is different from another. The different consensus algorithms to date are mentioned below.
Proof-of-Work (PoW)
It is a measure of DoS attacks and other service abuse.
Proof-of-Stake (PoS)
Introduced for the difficulties the PoW faced and aimed for distributed consensus.
Delegated Proof-of-Stake (DPoS)
This is a variation of the proof of stake.
Leased Proof-Of-Stake (LPoS)
Enhanced version of proof of stake consensus algorithm.
Proof Of Elapsed Time (PoET)
A blockchain network consensus mechanism that uses a particular tactic to shut out high energy consumption and resource utilization.
Practical Byzantine Fault Tolerance (PBFT)
This consensus mechanism protects against Byzantine faults and searches for optimization of aspects of Byzantine Fault Tolerance.
Simplified Byzantine Fault Tolerance (SBFT)
A simplified version of Byzantine Fault Tolerance consensus algorithm. This is the block that first collects all the transactions.
Delegated Byzantine Fault Tolerance (dBFT)
Introduced to overcome the Byzantine Generals’ Problem.
Directed Acyclic Graphs (DAG)
It is not a consensus algorithm but a form of data structure.
Proof-of-Activity (PoA)
A specific approach that mixes proof of work and proof of stake.
Proof-of-Importance (PoI)
This consensus algorithm proves the utility of nodes in a network.
Proof-of-Capacity (PoC)
Plotting is the feature of this consensus algorithm.
Proof-of-Burn (PoB)
This consensus algorithm allows miners to send a few coins to an ‘Eater Address’.
Proof-of-Weight (PoW)
Upgraded version of proof of stake algorithm.
Conclusion
We have reached the ending notes of the article. This article might have helped you to understand what consensus algorithm is, its role in blockchain, how it works, and the types of consensus algorithms. The most crucial part is selecting the right consensus algorithm when designing a blockchain network. All consensus algorithms are different from one another and possess their own benefits and drawbacks.
The wrong consensus algorithm will result in issues on the network’s security, decentralization, and performance such as slow transactions and higher costs. The success of blockchain technology is determined by the right consensus algorithm choice. Select the appropriate consensus mechanism required for a unique blockchain application.
