Blockchain Consensus Mechanisms

Anyone in the blockchain space for some time must have come across the term Consensus mechanism. In this article, I will discuss the basics of that term. The word consensus in computer science means "To Agree," Mechanism simply tells us "How we are going to Agree." Therefore, in layperson's terms, consensus mechanisms can be defined as the procedure that can be used to ensure that everyone agrees. Blockchain technologies are trustless and use Peer to Peer technology(The community) to make sure that the transactions are genuine, and that is where consensus mechanisms come in. They verify whether a transaction is valid and can be trusted or not.

The consensus mechanisms are the rules by which a blockchain operates, and it helps all the nodes(computers) in the network to verify transactions. Bitcoin, the first cryptocurrency, introduced this technology and used The Proof of Work Consensus Mechanism (POW). This proved inefficient due to its high energy consumption and slow processing speeds. As a result, more Consensus Mechanisms were created, with the most prominent one being Proof of Stake (POS), which is now used by Ethereum after the Merge.

The Different Consensus Mechanisms Simply Explained.

Proof of Work (POW): As explained above, this was first introduced with Bitcoin. It uses a block mining process, where the more work you put in(, The more powerful your computer is), the higher your chances of winning the block reward. The downside of this is that it is very energy consuming and prolonged since only seven transactions are processed per second.

Proof of Stake (POS): This is the second most used consensus mechanism and is tested at scale. In POS, validators lock up a predetermined "Stake" Amount. A Successful validator then receives a block reward for a successful validation, or their staked cryptocurrency is slashed if they lie or are malicious. Ethereum recently moved to a POS consensus mechanism.

Delegated Proof Of Stake (DPOS). This is somewhat similar to POS. The only difference is that only some people who stake can be node validators. A voting system exists where Validators vote for nodes that will be used for block verification. The Tron Blockchain uses this consensus mechanism.

Proof of Weight (POW): This consensus mechanism gives users a 'weight' based on how much cryptocurrency they are holding. It is based on the first Proof-of-Weight consensus model used by Algorand.

Proof of Authority (POA): This consensus mechanism allows only authorized entities to validate transactions in a blockchain network. It is more energy efficient but less decentralized. Vechain is an example of a Blockchain that uses this consensus mechanism.

Proof of History(POH): This consensus mechanism creates an order of transactions recorded to the blockchain to solve the issue of agreement on time. It is swift, and thousands of transactions can be processed per second. Solana uses both Proofs of Stake and Proof History Consensus Mechanisms.

Proof of Space/Capacity(POC): This consensus mechanism bases its mining algorithm on the amount of space available in a miner's hard drive.More storage capacity, the higher probability of a solution and the higher the chances of winning the reward. The Signum Blockchain uses this Consensus Mechanism.

As Blockchain technology evolves, more consensus mechanisms will be created, and more blockchains will adopt hybrid models of the different consensus mechanisms. In this series of Consensus mechanisms, we will dive deep into the various consensus mechanisms and how they work.

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