In a blockchain, a consensus mechanism is a process used to achieve agreement on the state of the blockchain among different nodes in the network.
It is an essential part of how blockchains work, as it allows the network to come to a consensus on the state of the blockchain, even if some of the nodes are compromised or behaving maliciously.
Types of Blockchain Consensus
There are several different types of consensus mechanisms that can be used in a blockchain, each with their own strengths and weaknesses. Some of the most common consensus mechanisms include:
1. Proof of Work (PoW): In a PoW consensus mechanism, nodes (called "miners") compete to solve a complex mathematical puzzle. The first miner to solve the puzzle gets to add a new block to the chain, and in return, they receive a reward. PoW is used by the Bitcoin and formerly by Ethereum networks though now migrated to PoS.
2. Proof of Stake (PoS): In a PoS consensus mechanism, nodes (called "validators") are chosen to create new blocks based on the number of tokens they hold. The more tokens a node holds, the higher its chances of being chosen to create a new block. PoS originated in 2012 with Peercoin and have become a common choice for altcoins. PoS is used by networks like EOS and Tezos.
3. Delegated Proof of Stake (DPoS): In a DPoS consensus mechanism, nodes (called "delegates") are chosen by the network's token holders to create new blocks. The delegates are then responsible for validating transactions and adding them to the chain. DPoS is used by networks like Steem and EOS.
4. Practical Byzantine Fault Tolerance (PBFT): In a PBFT consensus mechanism, nodes reach consensus through a series of message exchanges. Each node sends a message to all other nodes, stating its proposed action. If a sufficient number of nodes agree on the proposed action, it is considered to be consensus. PBFT is used by networks like Hyperledger Fabric.
5. Proof-of-Authority: Proof-of-authority is not as common but has a unique form. It is used mainly by private companies or organizations that use blocks created by vetted sources who have special permissions to access the network. Assurances are based on reputation and authority rather than public consensus as with other mechanisms.
6. Proof-of-Capacity: Proof-of-capacity currencies rely on a computerās available hard drive storage space for a decentralized block verification and generation process.
7. Proof-of-Activity: The proof-of-activity consensus mechanism is a hybrid of proof-of-stake and proof-of-work in which the miner seeks to utilize the best of both systems.
8. Proof-of-Elapsed Time: Proof-of-elapsed time uses a random timer that operates independently at every node to randomly assign the block verification to a miner.
9. Proof-of-Burn: With proof-of-burn, consensus is driven by miners periodically burning coins, a process of permanently deleting or eliminating that specific coin from circulation. This validates new transactions while preventing inflation.
10. Proof-Of-History (PoH): Proof of History is the creation of Solana ā a popular cryptocurrency. Solana combined proof of stake with proof of history and gave it a hybrid consensus algorithm. Proof of history makes sure that the blockchain is extremely fast. But at the same time, it keeps its security top-notch and the network decentralized.
Pros and Cons of Consensus Mechanism
Consensus mechanisms are a crucial part of how blockchains work, as they enable the network to reach agreement on the state of the chain. However, different consensus mechanisms have different strengths and weaknesses, and it is important to consider the pros and cons of each one when choosing a mechanism for a particular blockchain.
Some of the pros of different consensus mechanisms include:
1. Proof of Work (PoW): PoW is a well-established and widely used consensus mechanism. It is relatively secure, as it is difficult for an attacker to control a majority of the network's mining power. PoW is also decentralized, as anyone can participate in the mining process.
2. Proof of Stake (PoS): PoS is more energy-efficient than PoW, as it does not require miners to perform complex calculations. It is also potentially more secure, as an attacker would need to control a significant portion of the network's tokens in order to have a chance of adding a fraudulent block.
3. Delegated Proof of Stake (DPoS): It is a fast and scalable consensus mechanism, as it allows for a high number of transactions to be processed per second. It is also relatively simple, as token holders can directly choose the delegates who will validate transactions.
4. Practical Byzantine Fault Tolerance (PBFT): PBFT is a secure and efficient consensus mechanism that is well-suited to permissioned blockchains (i.e., those with a limited set of known, trusted participants). It is also relatively easy to implement.
Some of the cons of different consensus mechanisms include
1. Proof of Work (PoW): PoW is energy-intensive, as it requires miners to perform complex calculations. It can also be slow, as it takes time for miners to find a solution to the puzzle.
2. Proof of Stake (PoS): PoS can be less decentralized than PoW, as it relies on a smaller set of validators to reach consensus. It is also potentially less secure, as an attacker who controls a large number of tokens could have a greater chance of adding a fraudulent block.
3. Delegated Proof of Stake (DPoS): DPoS can be less decentralized than other consensus mechanisms, as it relies on a small group of delegates to validate transactions. It is also potentially less secure, as the delegates could collude to add fraudulent blocks.
4. Practical Byzantine Fault Tolerance (PBFT): PBFT is not well-suited to large, open networks, as it relies on a fixed set of known, trusted participants. It is also more complex to implement than some other consensus mechanisms.
Conclusion: consensus mechanism are very essential to how blockchain works, as they enable the network to reaach agreement on how the new blocks are formed. Some are energy consuming while some are not and hence the best consensus mechanism