The Different Consensus Mechanisms Explained

By now, most people interested in blockchain technology have at least heard of proof of work and proof of stake. They’re the two most popular consensus mechanisms in the cryptocurrency world. Likewise, everyone has probably heard that proof of stake is far more energy-efficient than proof of work, thanks to Ethereum. But, PoS and PoW are not the only consensus mechanisms out there. With that said, here are a few of the different consensus mechanisms explained.

Proof of Work
The consensus mechanism that started it all, PoW, was developed by Bitcoin creator Satoshi Nakamoto. It consumes so much energy because “miners” compete with each other to solve the complex algorithms on the blockchain to earn crypto. Miners crank the most computational power possible out of mining rigs at all times to earn the rewards. Though, PoW is generally considered one of the most secure consensus mechanisms.

Proof of Stake
The mechanism that changed the game, proof of stake, is so energy efficient because miners don’t compete to solve complex algorithms. Instead, a proof of stake blockchain has validator nodes that receive crypto rewards rather than miners. As a result, validating requires far less computational power. In Ethereum’s case, 99.5% less energy. Moreover, like proof of work, it is highly secure because hackers wouldn’t benefit much from breaking into the blockchain.

Proof of Authority
Proof of authority is far less common than proof of stake or proof of work. What makes PoA different from PoS or PoW is it is far more centralized. There are only a few validators that are pre-approved that control the blockchain. Furthermore, each validator makes their identity public, putting themselves at risk. Though PoA offers a faster transaction time than PoS or PoW with fewer resources, it defeats the purpose of blockchain technology: decentralization.

Proof of History
Solana popularized the proof of history consensus mechanism. Essentially, each block in the chain has a timestamp using a verifiable delay function. This timestamp cuts down the processing load by allowing any individual node to verify a block. Solana developers use a train analogy to explain PoH. Image blockchain tech as a railway system. Proof of history allows conductors to verify a train without contacting other conductors.

Share News

Related Posts

Leave a Reply

Your email address will not be published. Required fields are marked *