We all know that Blockchain is a decentralized distributed network that provides immutability, privacy, security, and transparency. Considering the absence of a central authority to authenticate & verify transactions, the Blockchain ensures that all transactions are safe & lawful. This is only feasible because of the consensus process, which is essential to any Blockchain network. A consensus algorithm is a mechanism for all peers in a Blockchain network to agree on the distributed ledger's current state. Consensus algorithms are used in this technique to give robustness to Blockchain networks and to develop trust between unfamiliar peers in a distributed computing environment. The consensus mechanism, in essence, assures that each new block added to the network is legitimate. The Blockchain is the only version of the truth that all nodes agree on. The Blockchain consensus protocol includes numerous specific purposes, including achieving consensus, collaboration, and cooperation, as well as ensuring that all nodes have equal rights and are required to participate in the consensus process. Consequently, a consensus algorithm looks for a point of agreement that is good for the whole network. Next, we'll look at a few different consensus strategies and how they work.
PoW (Proof of Work)
It is a consensus method for choosing the miner who will create the next block. Bitcoin uses the PoW consensus algorithm. The fundamental goal of this strategy is to quickly & efficiently answer a complicated mathematical problem. Because this mathematical work demands a significant amount of computer processing power, the node that completes it first is awarded the privilege of mining the next block. For more information on PoW, read the Proof of Work (PoW) Consensus.
PBFT (Practical Byzantine Fault Tolerance)
PBFT stands for Practical Byzantine Fault Tolerance. See the most recent article on Byzantine Fault Tolerance in Practice for more information (pBFT).
PoS (Proof of Stake)
It is the most commonly used Proof of Work substitute (PoW). The consensus on Ethereum has shifted from PoW - PoS. Validators invest in the system's currency by locking up a percentage of their coins as a stake in this form of the consensus process, rather than investing in expensive equipment to solve a complex issue. All validators will then validate the blocks. Validators will stake their money on a block that they feel can be added to the chain and validated. Validators are paid a portion of their stake based on the number of blocks submitted to the Blockchain, and their stake grows in lockstep with the number of blocks uploaded. Finally, a validator is chosen to build a new block based on their economic stake in the network. As a result, through an incentive mechanism, PoS encourage validators to reach a consensus.
PoB (Proof of Burn)
Validators burn coins by sending them to a location where they can't be retrieved rather than investing in expensive hardware. Validators gain the ability to mine on the system via a random selection process by committing the coins to an unreachable address. As a result, validators are forced to make long-term commitments in return for a short-term loss when tokens are burned. Miners may damage the Blockchain application's native money or the other chain's currency, such as Bitcoin, depending on how the PoB is implemented. If they burn more money, they are much more likely to be selected to mine the next block. Despite the fact that PoB is more enticing than PoW, it wastes resources inefficiently. Furthermore, whether mining power is solely given to those who are prepared to pay more money has been questioned.
PoET (Proof of Elapsed Time)
It is a consensus process that chooses the next block based solely on fairness. It's a popular choice for permission Blockchain networks. Any verifier on the network does have an equal probability of creating its own block using this method. All nodes wait an arbitrary period of time before providing a proof of their delay to the block. The barriers that have been erected are broadcast to the network for others to inspect. The verifier with the least timer value wins the proof portion. The Blockchain is updated with the block of the approved validator node. Additional checks are included in the software to prevent nodes from always winning elections or reporting the lowest timer value. Proof of Weight, Proof of Activity, Proof of Importance, Leased Proof of Stake, and more consensus methods are available. Because Blockchain networks are unable to function without consensus algorithms to validate each and every transaction, it is vital to choose one wisely depending on the needs of the business network.