The core purpose of a consensus mechanism is always the same: it provides some kind of proof that all network nodes can agree on the true and valid state of the blockchain. This is how to avoid malicious attacks on the web. Without it, cryptocurrencies lose value.
In a blockchain, the public is generally validating and timestamping transactions. Once the data is confirmed by participating users or nodes, the transaction record is permanently written into the block.
The newly generated block is associated with the previous block and broadcast to the entire network, thus achieving consensus: the ledger recorded by every node on the blockchain is the same.
However, different consensus mechanism algorithms often face similar problems, and ensure liveness and Security as much as possible. There isn't a single solution that works at the same time.
Bitcoin BTC uses a proof-of-work (POW) mechanism, which has obvious challenges and can be fatal. Therefore, Proof-of-Stake (POS) mechanisms have become increasingly popular and require users to provide ownership of a certain amount of cryptocurrency, which is beneficial to users who own more cryptocurrency.
Many startups are starting to look for other ways to reach consensus to address these deep structural problems. Alternatives are currently under development.
While the development teams of Bitcoin and Ethereum are constantly working to improve their systems, there are also lesser-known consensus mechanisms that desperately want a place.
1. Proof of Authority
PoA is a form of personal identification. Users must be personally identified and verified on the platform to become trusted nodes.
Users who confirm their identity have the right to validate blocks on the chain. The cryptocurrency rewards earned by users are public, as are their malicious attacks; this means that personal credibility is at risk when securing the network.
Egor Homakov's Fairlayer project, which uses this consensus mechanism, has not yet released a cryptocurrency. But Homakov has a lot of credibility, and some in the tech community believe it's doing what it's doing: building an infinitely scalable blockchain that doesn't compromise on security.
Another well-known application using PoA is Vivacoin. They propose a different approach, with only a few layers, but the concept remains focused on identifying identities. At the same time, VeChain has an extremely mature enterprise solution centered on the PoA consensus mechanism.
2. Markov Chain Monte Carlo (MCMC)
The biggest success of IOTA is the application of complex, non-standard technologies, which run on the DAG architecture and use MCMC to reach consensus. This is a complex algorithm, but the concept is simple in application, and the algorithm is well understood by statisticians.
After users broadcast their transactions, the algorithm randomly selects two unconfirmed transactions to prove. With IOTA, a small amount of proof-of-work is required to confirm these transactions, which can then be broadcast by others to verify the user's own transactions.
IOTA will initially use masternodes to protect against network failures by ensuring that any fraudulent transactions and attacks can be eliminated. In addition, the absence of mining activity means a substantial increase in energy efficiency.
Matrix also suggests MCMC, as does BigTangle, whose structure looks similar to IOTA in design, although perhaps slightly less complete.
3. Proof of ContribuTIon
POC is another consensus mechanism that does not use mining. Essentially, it is an algorithm that achieves consensus by measuring the useful contributions of users who support network functions.
Attacks on the network could theoretically be prevented by the high cost of overloading the system. POC is CyberVein's system of choice: they propose a decentralized database network that runs on the user's disk space.
POC is based on storage space and allows users to provide consensus by providing workloads that are useful to the network. This is converted into a secure dataset, and users can earn cryptocurrency rewards.
Since storage capacity is a scarce resource, it is believed that the attack becomes infeasible due to the high cost required. However, this is not a failsafe mechanism per se; they operate on IOTA-like DAG architecture and will initially use centralized nodes to secure the main chain.
A separate blockchain using Proof-of-Work is another solution they have come up with to secure the DAG, ensuring that fraudulent transactions are invalidated and the entire network can be proven authentic.
Additionally, users are encouraged to become trusted full nodes by donating enough disk space to store the entire network and all of its transactions, offering higher CyberVein (CVT) cryptocurrency payments based on the amount of storage users contribute.
Providing disk space to store values ​​and smart contract transactions achieves the purpose of benefiting the system, which is to distribute stored data among user devices.
4. Byzantine Agreement
The two most important BA systems are Ripple and Stellar, which is an attractive mechanism. Consensus can be reached quickly and economically without the involvement of asset ownership.
However, this approach requires a certain degree of centralization, otherwise it requires unrealistic coordination and equalization of resources.
Both Ripple and Stellar use voting methods, Ripple uses probabilistic voting, and Stellar uses a federation system, which is good for liveness and security, respectively.
So with Ripple: Proof nodes collect transactions, convert them into proposals and send them to other proof nodes. Once advised, they conduct a series of votes to weed out fraudulent transactions.
For practical purposes, this method is valid, but the probability that a verified transaction is actually valid is less than 99%. This is why there are flaws in security and why Ripple has to centrally manage or develop solutions.
Traditional Byzantine Agreement systems have turned off membership, where the number of user nodes is fixed. Stellar allows for open membership, where nodes can join and leave at will.
Their federation model means that nodes can reach consensus in a "federation" of nodes they deem to be trustworthy, without involving all nodes in the network. While Ripple requires all nodes to accept the same transactions through a series of votes, federated voting means nodes only need to rely on a single group to prove their transactions.
The Byzantine Agreement system is essentially costless and scalable: throughput is 4,500 transactions per second with 64 nodes. More nodes degrades network performance, but this is still a big advantage over Bitcoin's maximum of 7 transactions per second.
Blockchain is new
We know that blockchain is still being explored, which means that it will be some time before we see the potential of blockchain technology. The key challenge is to create an efficient consensus mechanism that does not compromise the concept of decentralization.
While Ripple is centralized at its core and also implies a “decentralized strategy,†IOTA and CyberVein are web applications that start with centralized control, which only manifests when they reach a critical number of users.
It depends on possibility and effectiveness. Most startups are trying to devise alternative consensus methods in order to be called winners. Future solutions that combine security with scalability may already be in development.
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