Blockchain Consensus Mechanisms
At the time of writing this article we have following type of Blockchain Consensus Mechanisms:
- Proof of Work
- Proof of State
- Delegated Proof of Stake
- Proof of Burn
- Practical Byzantine Fault-tolerant Mechanism
- Proof of Elapsed Time
- Proof of Importance
Proof of Work
Proof of Work is a Consensus algorithm that demand some form of work from users. In most cases, this is the expenditure of computer power. It is based on the principle that a certain amount of computational power needs to be expended before suggesting that some value to be entered into the blockchain. It us used to validate transactions upon which a new block is then added to the blockchain. Proof of Work is very common in cryptocurrencies such as bitcoin and others
- Scalability: As number of participants increases, the difficulty in mining increase, and hence required more computational power. Difficulty is proportional to computational power of network, time to add block remains constant. As number of blocks in the network increase, it increase the difficulty.
- The bigger the community, the more secure is: It becomes less acceptable to 51% attack. It is always advisable to use larger number of nodes with less computational power rather use smaller number of nodes with more computational power
- A lot of processing power is required
- It is quite expensive
- In the case of bitcoin, as time passes mining becomes harder, which means more computing power and higher costs.
- Vulnerable to the 51% attack
Before choosing this consensus algorithm we need to decide the value that we get after mining is worth more than what we spend in electricity, computation, and computation. Sometimes the currency that we get in exchange, might face fall in value, which makes this algorithm more expensive and less worth.