Consensus algorithm is used to reach consensus within a system and is therefore also known as “consensus algorithm”. Proof of Work, Proof of Stake, Proof of Burn, Proof of History, Proof of Authority in blockchain technology are actually consensus algorithms.
What is Consensus Algorithm?
Consensus algorithms are community-accepted decisions to manage a group or system. These rules are used to rule the majority and gather it under a common idea. While creating the consensus algorithm, the benefit of the users is prioritized and at the same time it is aimed that all users have equal rights.
The consensus algorithm, also known as the consensus algorithm, not only agrees with the majority of the votes, but also accepts one that benefits them all. In other words, it’s always a win for the network.
What Does Consensus Algorithm Do?
The consensus algorithm plays an active role in increasing the benefits of blockchain technology to users. Thus, the principle of decentralization underlying the blockchain technology is placed on a more reliable basis in the transactions made by the users. With consensus algorithms, it is possible to prevent possible fraudulent activities and double spending in transactions made between individuals. In addition, the consensus algorithm helps the users in the networks to gather under a certain consensus, while ensuring that the network continues in a sustainable way.
The consensus algorithm allows nodes in a blockchain network to acknowledge the accuracy of transaction and block data between them. Thanks to this algorithm, all nodes in the network can be sure to have the same data, and the security and stability of the network can be maintained. In addition, the consensus algorithm helps prevent the exchange of a transaction or block data, ensure secure and up-to-date data sharing between nodes in the network, increase the scalability of the network, and reduce insecurity among the nodes in the network.
In summary, the consensus algorithm increases the secure, up-to-date and scalability of the blockchain network, ensuring the accuracy of transactions and the unaltered data on the network.
Types of Consensus Algorithms
As mentioned above, a consensus algorithm is an algorithm used to make multiple nodes in a blockchain network accept the authenticity of a transaction or block data. The 3 most well-known types of consensus algorithm, which has many types, are as follows:
Proof of Work (PoW)
Proof of Work is an algorithm developed to prevent large amounts of computing power from being used against malicious players in the system. Although it was introduced by Hal Finney in 2004, its first application was Bitcoin in 2009, as the first implementation of Finney’s idea. It is also an algorithm used to achieve consensus in other cryptocurrencies.
The most important detail in this algorithm is the processing power and the number of miners. Because as the processing power and the number of miners increase, this algorithm theoretically becomes more secure. In the days when Bitcoin first came out, it was possible to be a miner even with a moderate mobile phone, but now special devices are used for Bitcoin mining.
Proof of Stake (PoS)
Proof-of-Stake (PoS) consensus mechanisms are designed to address the inefficiencies found in traditional Proof-of-Work (PoW) protocols. Rather than relying on crypto mining, PoS blockchains use nodes selected based on platform token shares to verify and record transactions. Most new blockchain projects use some form of PoS consensus mechanism as it is significantly more scalable, flexible and environmentally friendly than PoW iterations.
Delegated Proof of Stake (DPoS)
Delegated Proof of Stake algorithm is an algorithm produced from the Proof of Stake algorithm. DPoS was first seen in the BitShares project documentation. In this section, I will also benefit from these documents.[4]. In DPoS, blocks are mined by predetermined user groups. This user group is called witnesses. Witnesses are chosen by token holders. Token holders have voting rights in proportion to the tokens they own. Witnesses are rewarded for performing their duties and punished for misconduct.
