Most blockchains share many characteristics and operate in similar ways. However, blockchain differs in one way, i.e. how to reach consensus? Which transactions are genuine, and which are added to the blockchain? Blockchains accomplish this through the use of various consensus mechanisms.
Knowing Consensus Mechanisms.
Consensus mechanisms (consensus protocols or consensus algorithms) enable distributed systems (computer networks) to collaborate while remaining secure.
These methods have been in use for a long time. This could be to build agreements between database nodes, application servers, and other business infrastructure. In recent years new consensus methods were created to provide network status for crypto-economic systems like Ethereum.
A consensus mechanism in a crypto-economic system also aids in other things like the prevention of attacks on the economy. In theory, an attacker who controls 51% of the network can jeopardize consensus. Consensus mechanisms intend to render this “51 percent attack” impractical. Different mechanisms are being developed to address this security issue in different ways.
Major Blockchain Consensus Mechanisms Types!
There are 3 primary types of consensus mechanism algorithms that operate on various principles.
Proof of Work
The work-proof algorithm or POW is a common method for consensus. Most popular networks for cryptocurrency utilize them, including bitcoin, and Litecoin. A participant node must be sure of the work they have done and submitted. It should qualify for the ability to add new transactions to the blockchain. However, large energy usage and a longer processing time were necessary for the whole Bitcoin mining mechanism.
Proof of Stake
The proof of the stake is another popular algorithm or POS. This method has developed as an alternative for cheap and low energy as compared to the Proof of work algorithm. It involves giving a participant node responsibility for keeping a public ledger depending on the number of tokens it holds for virtual currency. However, this is inconvenient to encourage the conserving of the crypto coin instead of expenditures.
Proof Of Capacity
Other consensus methods, such as POC or Proof of Capacity, enable memory space to be shared across participating nodes on the network of blockchain. The more a node’s memory or disk capacity, the more rights it has to maintain the public record up to current.
The Goals of the Blockchain Consensus Mechanism?
1. Accord Unified
A major goal of these mechanisms is to achieve a unified agreement.
In contrast to centralized systems, where trust in authority is required, users in a decentralized system can function without developing trust in one another. There are certain protocols in the Distributed blockchain network. These ensure that the data which is a part of this process is reliable and has accuracy. Also, the public ledger’s status is the latest and updated.
2. Match Economic Incentives
Talking about developing a system that can self-regulate, it is critical to align the contemplation of network participants.
In this case, what rewards good behavior while punishing bad actors is a blockchain consensus protocol. This ensures that economic incentives are also regulated.
Consensus mechanisms that are fair and equitable allow anyone to participate in the network and use the same fundamentals. In this way, it justifies the blockchain system’s open-source and decentralized nature.
4. Avoid Double Spending
Consensus mechanisms rely on specific algorithms to ensure that only verified and valid transactions are included in the public transparent ledger. This eliminates the traditional problem of double-spending or spending a digital currency twice.
5. Tolerant of Errors
Another feature of the Consensus method is that it ensures the blockchain is fault-tolerant, consistent, and dependable. That is, even in the face of failures and threats, the governed system would continue to function indefinitely.
There are currently a plethora of Blockchain consensus algorithms in the ecosystem, and many more are on their way to the market. As a result, it is critical for every Blockchain development company and aspiring entrepreneur to understand the factors that define a good consensus protocol, as well as the consequences of choosing a bad one.
Characteristics of a Good Blockchain Consensus Mechanism
In a good consensus mechanism, all nodes are capable of producing results that are valid according to protocol rules.
A good consensus mechanism ensures that every node in the network participates in the voting process.
A Good consensus model is a consensus mechanism in which all nodes actively participate and contribute to the updating of the Blockchain database.
Another feature of a good mechanism is that it gives equal weight and worth to each vote received from the node.
With that out of the way, let’s look at what happens when these factors are ignored and a poor consensus model is introduced into the development process.
What is the Importance of Blockchain Consensus?
Blockchain consensus is a process that allows blockchains to function; without which blockchains would fail. Understanding blockchain development entails understanding the blockchain consensus mechanisms that allow these platforms to function.
Every method comes with advantages and is thus integrated into a user-friendly platform. Proof of Work might be appropriate for the bitcoin blockchain, but it may not be appropriate for a company’s private blockchain. There is no form of consensus that is suitable for every blockchain at the same time. Hence these methods will be used until one is developed.
The introduction of the Bitcoin system has resulted in yet another boom in the Internet era. Many Blockchain systems have emerged in a relatively short period. Characteristics like decentration, consensus mechanisms, intelligent contracts, and other characteristics make them applicable to a wide range of fields such as finance, education, medicine, technology, and so on.
Blockchain technology is built around the consensus mechanism. And a good consensus mechanism is critical to the stable operation of the Blockchain system. Consensus mechanism methodologies come in a variety of flavors. In all cases, the consensus approach’s goal is to secure the system, primarily through financial means: it should be prohibitively expensive, making it impossible to attack the system and more profitable to keep it secure. The required consensus mechanism process should be chosen based on the project requirements.