Consensus mechanisms can be considered the backbone of any blockchain network because they ensure the integrity and consistency of the network, making sure it’s tamper-proof and immutable. Consensus mechanisms bear the conditions that nodes and validators need to meet for a new block to be added to the blockchain.
They ensure that only valid transactions are validated on the network, hence making sure the blockchain is secure and reliable. There are different types of consensus protocols, and they are divided into two broadly defined groups, which are proof-based protocols and voting-based protocols.
While Proof of Stake (PoS) and Proof of Work (PoW) are the most popular types of consensus mechanisms, there are more other types that you need to know. In this article, let’s take a quick look at 8 different types of consensus mechanisms.
8 Types of Consensus Mechanisms
#1: PoW (Proof of Work)
This is the first and most popular consensus mechanism in the blockchain community. It was invented by Satoshi Nakamoto, Bitcoin’s founder. This algorithm is built around mining, and the miners here are meant to solve complex mathematical puzzles that require complicated computational power. Because of these, miners often use complicated mining methods like GPU mining, ASIC mining, U mining, etc. When a miner is the first to solve a puzzle, they are being rewarded with a block, therefore, mining involves a lot of competition among miners.
Many cryptocurrencies today use the proof of work algorithm – chief among them is Bitcoin. However, the major downside to PoW is that it consumes too many resources for its mining activities. It consumes too much energy, and so many blockchain networks are looking for an alternative to it.
#2: PoS (Proof of Stake)
Compared to PoW, proof of stake algorithms require less energy. This consensus mechanism is based on the concept of participants – called validators, staking their coins to be qualified to add a new block to the blockchain. The more coins the staker has, the better their chances of being qualified for adding a new block of the transaction to the blockchain.
Here, the validators don’t get rewarded with blocks for their hard work. Instead, their rewards are only the transaction fee. Because of its energy-efficient nature, PoS is considered more suitable for platforms with static coin supplies.
#3: DPoS (Delegated Proof of Stake)
In this type of consensus mechanism, s got to stake their coins and then vote for a particular number of delegates. The more a has to stake, the more weighty their vote will be. At the end of it all, the delegate with the highest number of votes will be chosen to produce new blocks.
In a delegated proof of stake algorithm, validators or delegates are rewarded with a specific amount of coins or with the transaction fees as it is with some other consensus mechanisms like proof of stake.
One unique thing about DPoS is that it is a very fast consensus mechanism – it is one of the fastest blockchain algorithms. Compared to PoW, this mechanism can handle a higher number of transactions at a time.
#4: PoC (Proof of Capacity)
Here, solutions to complex mathematical puzzles are stored in digital hard disks. Whenever a storage device is filled with solutions to mathematical puzzles, the can now use it to create new blocks. The whole process is referred to as plotting. The with the largest memory space will be given the chance to produce a new block.
#5: PoH (Proof of History)
This is a new form of consensus algorithm developed by Solana’s Project. The whole Proof of History algorithm is built on the trust that a transaction has once occurred before and after an event. Solana presently uses the consensus mechanism in combination with its PoS algorithm. The unique hybrid ensures a super-fast blockchain while still keeping it secured and decentralized.
#6: PoI (Proof of Identity)
PoI is a consensus mechanism that tries to match the identity of a with their private key. It is a piece of cryptographic evidence associated with the private key of any that is cryptographically attached to a specific transaction.
This type of algorithm ensures the integrity and authenticity of any data created on the blockchain. One practical use of PoI is when it’s used in a smart city that uses the algorithm to the identity of its citizens. It can also be used in a company to check in verified staff to their buildings.
#7: PoA (Proof of Authority)
PoA comes as a modified version of PoS where, instead of validators staking their coins to validate transactions, they stake their identities. This is done to ensure the security of the network as validators put their reputation on the line. In PoA, only the nodes that eventually become validators are given the privilege to produce new blocks.
To encourage these s who stake their identities to preserve the blockchain are hence rewarded so the blockchain can maintain its integrity in all ways.
#8: PoA (Proof of Activity)
This is a perfect hybrid of proof of work and proof of stake. In PoA, miners are also providing solutions to a puzzle in order to earn a reward. However, the blocks created in this consensus mechanism are templates that will later be used to randomly choose a group of validators to sign a block. The higher the stakes of a validator, the greater their chance of being chosen to sign a new block.
Once the chosen validators sign any new block, the block is then added to the blockchain network. At the same time unsigned blocks get discarded. The miners and the validators get their rewards from the transaction fees on the network.
Final Note
There are different types of consensus mechanisms but all of them are working to fulfill similar goals – ensuring the security and integrity of the blockchain networking they are ing. If you are intending to utilize blockchain technology in your organization or delve into the cryptocurrency world, it will be good to have a good knowledge of the various blockchain consensus mechanisms that are and how they are different from each other.