Fundametals of Blockchain and basics_L1.pptx
- 20. Consensus • A consensus algorithm is a procedure through which all the peers of the Blockchain network reach a common agreement about the present state of the distributed ledger. • In this way, consensus algorithms achieve reliability in the Blockchain network and establish trust between unknown peers in a distributed computing environment. • Essentially, the consensus protocol makes sure that every new block that is added to the Blockchain is the one and only version of the truth that is agreed upon by all the nodes in the Blockchain. • The Blockchain consensus protocol consists of some specific objectives such as coming to an agreement, collaboration, cooperation, equal rights to every node, and mandatory participation of each node in the consensus process. • Thus, a consensus algorithm aims at finding a common agreement that is a win for the entire network.
- 21. Proof of Work • Proof of Work (PoW): This consensus algorithm is used to select a miner for the next block generation. • Bitcoin uses this PoW consensus algorithm. • The central idea behind this algorithm is to solve a complex mathematical puzzle and easily give out a solution. • This mathematical puzzle requires a lot of computational power and thus, the node who solves the puzzle as soon as possible gets to mine the next block.
- 22. Proof of Stake (PoS) • Proof of Stake (PoS): This is the most common alternative to PoW. Ethereum has shifted from PoW to PoS consensus. • In this type of consensus algorithm, instead of investing in expensive hardware to solve a complex puzzle, validators invest in the coins of the system by locking up some of their coins as stakes. • After that, all the validators will start validating the blocks. • Validators will validate blocks by placing a bet on them if they discover a block that they think can be added to the chain. • Based on the actual blocks added in the Blockchain, all the validators get a reward proportionate to their bets, and their stake increase accordingly. • In the end, a validator is chosen to generate a new block based on its economic stake in the network. • Thus, PoS encourages validators through an incentive mechanism to reach to an agreement.
- 23. Delegated Proof Of Stake • Delegated Proof Of Stake (DPoS): This is another type of Proof of Stake consensus algorithm. • This type of consensus mechanism depends on the basis of the delegation of votes. • The users delegate their votes to other users. • Whichever user then mines the block will distribute the rewards to the users who delegated to that particular vote.