Blockchain Consensus

Mechanisms/Algorithms
Outline

 Describing Consensus Mechanisms/Algorithms

 Applications of Consensus Mechanisms in Blokchain
 Consensus Mechanisms used in blockchain
 Comparing Consensus Mechanisms
 Summary Table of Consensus Mechanisms
 References
Describing Consensus Mechanisms

 A consensus algorithm is a process in computer science used to achieve agreement on a single data
value among distributed processes or systems

 Consensus mechanisms are fundamental protocols in blockchain technology that ensure agreement
among network participants on the validity of transactions.

 They play a crucial role in maintaining security by preventing fraud and ensuring that all transactions
are accurately recorded on the blockchain.

 consensus mechanisms support decentralization, as they eliminate the need for a central authority,
allowing for a distributed network of nodes to validate transactions.

 This fosters trust and consistency within the blockchain, enabling reliable and tamper-proof data
management.
Applications of consensus algorithms in blockchain

 Blockchain decentralized Distributed Digital Ledger database which is collectively

managed by distributed computers or nodes on a distributed peer-to-peer network.
 Each peer or node maintains a copy of the ledger to prevent a single point of failure.
 Any updates or validations on the network reflect in all copies simultaneously
 This guarantees the fidelity and security of data records and generates trust in the
system -- without the need for a centralized trusted third party
 Blockchain networks rely on consensus algorithms to reach agreement among various
distributed nodes.
 A consensus mechanism secures the network and prevents unauthorized users from
validating bad transactions.
 The mechanism also enables agreement on the network even when no single node is
in charge
 Consensus Mechanisms
Consensus Mechanism Description
Proof of Work (PoW) Computational puzzle-solving
Proof of Stake (PoS) Stake-based validation

Delegated Proof of Stake (DPoS) Delegate-based validation

Practical Byzantine Fault Tolerance (PBFT) Voting-based consensus

Proof of Authority (PoA) Authority-based validation

Proof of Burn (PoB) Burn coins for validation rights

Proof of Capacity (PoC) Storage-based validation

Proof of Elapsed Time (PoET) Randomized wait for block validation

Proof of Work (PoW) Explained

Understanding Proof of Work

● Proof of Work requires miners to solve complex

mathematical puzzles, competing to add a new block
to the blockchain.

● The first miner to solve the puzzle validates the

transaction and is rewarded with cryptocurrency,
incentivizing participation.

● Bitcoin, launched in 2009, is the most notable

example of PoW, where each miner contributes
computational power to secure the network.
Consensus Mechanisms

Proof of Stake (PoS) Explained

Understanding PoS

● Proof of Stake (PoS) selects validators based on

the amount of cryptocurrency they hold and are
willing to 'stake' as collateral.

● Validators are incentivized to act honestly since

they risk losing their staked coins if they behave
maliciously.

● In PoS, the more coins a participant stakes, the

higher their chances of being chosen to validate
transactions, resembling a lottery system.

● Ethereum transitioned to PoS with Ethereum

2.0, significantly reducing energy consumption
compared to the traditional Proof of Work
model.
Consensus Mechanisms

Delegated Proof of Stake (DPoS)

Overview of DPoS
● Delegated Proof of Stake (DPoS) allows stakeholders to elect a small group of
delegates to validate transactions on their behalf. This system enhances
efficiency and scalability by reducing the number of nodes required for
consensus.

● In DPoS, stakeholders vote based on the amount of cryptocurrency they hold,

ensuring that those with greater investment have more influence over the
network's governance.

● Delegates are responsible for maintaining the network and can be replaced
through voting if they fail to act honestly, promoting accountability within the
system.

● DPoS is designed to achieve faster transaction times and higher throughput

compared to traditional Proof of Work (PoW) systems, making it suitable for
applications requiring quick confirmations.

● EOS is a prominent example of a blockchain utilizing DPoS, where token

holders vote for 21 block producers who validate transactions and create new
blocks, resulting in efficient and scalable network operations.
Consensus Mechanisms

Alternative Consensus Mechanisms

Practical Byzantine Fault
Tolerance (PBFT)
Proof of Authority (PoA) Proof of Burn (PoB)

PBFT allows a network to reach PoA relies on a set of pre-approved In PoB, participants destroy a portion of
consensus even with malicious nodes validators, ensuring fast transactions in cryptocurrency to validate transactions,
present, relying on majority voting permissioned blockchains. It is often used demonstrating their commitment to the
among honest nodes. It is primarily used in enterprise settings. network. An example is Slimcoin.
in private blockchains.

Proof of Capacity (PoC) Proof of Elapsed Time (PoET) Delegated Proof of Stake (DPoS)

PoC allows miners to use allocated PoET utilizes a randomized waiting DPoS enables stakeholders to elect
storage space for mining, providing an period to select validators for block delegates for transaction validation,
energy-efficient alternative to traditional creation, promoting fairness and energy enhancing efficiency and scalability. EOS
mining. Burstcoin is a notable example. efficiency. Hyperledger Sawtooth is a prominent example of this
implements this mechanism. mechanism.
Consensus

Comparing Consensus Mechanisms

Cons
Pros

● Proof of Work (PoW) provides high security and ● Proof of Work (PoW) consumes a considerable
decentralization, making it difficult to attack the amount of energy, leading to environmental
network. concerns.

● Proof of Stake (PoS) significantly reduces energy ● Proof of Stake (PoS) can lead to centralization if
consumption compared to PoW, enhancing a few participants hold a large amount of coins.
sustainability.
● Delegated Proof of Stake (DPoS) can be
● Delegated Proof of Stake (DPoS) improves vulnerable to collusion among delegates,
transaction speeds and scalability by reducing undermining its integrity.
the number of validators needed for consensus.
● Practical Byzantine Fault Tolerance (PBFT) can
● Practical Byzantine Fault Tolerance (PBFT) become inefficient as the number of nodes
ensures high throughput and reliability in private increases, leading to higher communication
blockchains with trusted nodes. overhead.

● Proof of Authority (PoA) allows for fast ● Proof of Authority (PoA) sacrifices
transactions and is suitable for applications decentralization for speed, making it less
requiring high trust and minimal latency. suitable for public blockchains.
 Summary Table of Consensus Mechanisms
Consensus Mechanism Description Example of Blockchain Ecosystem
Proof of Work (PoW) Computational puzzle-solving Bitcoin https://bitcoin.org
Proof of Stake (PoS) Stake-based validation Ethereum 2.0 https://ethereum.org

Delegated Proof of Stake (DPoS) Delegate-based validation EOS https://eos.io

Hyperledger Fabric
Practical Byzantine Fault Tolerance
Voting-based consensus https://www.hyperledger.org/use/fabr
(PBFT)
ic
Proof of Authority (PoA) Authority-based validation VeChain https://www.vechain.org
Slimcoin https://github.com/slimcoin-
Proof of Burn (PoB) Burn coins for validation rights
project.
Proof of Capacity (PoC) Storage-based validation Burstcoin https://www.burst-coin.org
Hyperledger Sawtooth
Proof of Elapsed Time (PoET) Randomized wait for block validation https://www.hyperledger.org/use/saw
tooth
References

References

● Buterin, V. (2020). Ethereum whitepaper. Ethereum

Foundation.
● Cachin, C. (2016). Architecture of the Hyperledger blockchain
fabric. IBM Research.
● Iyer, K. (2016). Proof of Burn: Consensus without energy waste.
Slimcoin Whitepaper.
Thank you.