Bitcoin’s consensus mechanism is great, but it’s not perfect. So this topic is about the only consensus protocols manual you need
The only consensus protocols manual you need
Proof of stake is the most common alternative to proof of work. In this type of consensus algorithm, instead of investing in expensive computing equipment in the race to mine blocks, a ‘validator’ invests in the system’s coins.
Note the term validator. That’s because no coin generation (mining) exists as proof of stake. Instead, all coins exist from day one, and validators (also known as stakeholders, because they hold a stake in the system) are paid strictly in transaction fees.
In proof of staking, your chances of being chosen to generate the next block depend on the fraction of the amount of money in the system that you own (or dedicated to staking). A validator with 300 coins will be three times more likely to be selected as the one with 100 coins.
Proof of activity
To avoid hyperinflation (what happens when too much currency floods the system) bitcoin will only produce 21 million bitcoins.
In proof-of-work, mining begins in a traditional proof-of-work fashion, with miners racing to solve a cryptographic puzzle. Depending on the implementation, mined blocks do not contain any transactions (they are more like patterns), so the winning block will contain only the miner’s reward header and address.
At this point of view, the system no longer switches to proof of stake. Based on the information in the header, a random group of validators is selected to sign the new block. The more coins a validator owns in the system, the more likely he or she is to be selected. The template becomes an official block as soon as all validators sign it.
Proof of burn
With proof of burn, instead of pouring money into expensive computing equipment, you ‘burn’ the coins by sending them to an address where they cannot be recovered. By pledging your coins to never land, you earn a lifetime privilege to mine on a system based on a random selection process.
Depending on how proof-of-write is implemented, miners can burn native coins or the currency of an alternate chain, such as bitcoin.
Over time, your bets in the system decrease, so you will eventually want to burn more money to increase your odds of being picked in the lottery. (This mimics bitcoin’s mining process, where you must constantly invest in more modern computing equipment to maintain hash power.)
Proof of capacity
As we have seen, most of these alternative protocols use some kind of pay-to-play plan. Proof of space is no different, but here you ‘pay the price’ with hard drive space. The more hard drive space you have, the better your chances of mining the next block and earning block rewards.
Before mining in a proof of capacity system, the algorithm generates large data sets called ‘batches’, which are stored by you on your hard drive. The more tiles you have, the higher your chances of finding the next tile in the series.
Proof of elapsed time
Chip maker Intel has come up with its own alternative consensus protocol called proof of time. This system works similarly to proof of work, but consumes much less electricity.
Furthermore, instead of asking participants to solve a cryptographic puzzle, the algorithm uses a trusted execution environment (TEE) – such as SGX – to ensure that blocks are generated in a lottery fashion. random, but no mandatory work.
Hope that this article brought you a thorough knowledge about consensus protocols manual. If you want to know more about this field, contact SmartOSC here!
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