A Guide to Blockchain Consensus Protocol

By Japhet Kapambwe Mesa

A Blockchain is a decentralized peer-to-peer system with no central authority, that is, there is no leader to make decisions. So, how does anything get done on a blockchain? How are decisions made? This article seeks to help the reader gain an understanding of the decision-making mechanisms of a blockchain.

For a blockchain to make decisions the nodes need to come to a consensus using a consensus mechanism. Consensus is a general agreement among full nodes about the next block to be added to the chain. Consensus is a dynamic way of reaching agreement in a group. It ensures integrity of the chain.

A consensus mechanism may have various objectives. Below are some common objectives:

• Agreement Seeking: A consensus mechanism should bring about as much agreement from the group as possible.
• Collaborative: All the participants should aim to work together to achieve a result that puts the best interest of the group first.
• Cooperative: All the participants should put their own interests aside and work as a team more than individuals.
• Egalitarian: A group trying to achieve consensus should be as egalitarian as possible. What this basically means that each and every vote has equal weightage. One member’s vote can’t be more important than another’s.
• Inclusive: As many people as possible should be involved in the consensus process. It shouldn’t be like normal voting where people don’t really feel like voting because they believe that their vote won’t have any weightage in the long run.
• Participatory: The consensus mechanism should be such that everyone should actively participate in the overall process.

There have been many iterations of peer-to-peer decentralized currency systems in the past. However, they failed because they were unable to resolve the biggest problem around consensus. The problem, which is called the Byzantine General’s Problem, was solved by Bitcoin. Since then, a number of Blockchain consensus protocols have been developed. We will now introduce the primary consensus mechanisms.

1.         Proof of Work:

Proof of Work (PoW) is particularly for cryptocurrencies, and the most utilized system of all. This is presumably the case because since 2009 it has officially demonstrated its strength and security.

The Proof of Work process is known as mining and the nodes are known as miners. Miners solve complex mathematical puzzles which require a lot computational power. The first one to solve the puzzle gets to create a block and receives a reward for creating a block.

2.         Proof Of Stake (POS)

Proof Of Stake (POS) is the more environmentally friendly brother of the Proof Of Work protocol. Proof Of Stake makes use of the premise that those who own most coins in a network have a vested interested in keeping the network maintained and the value of it’s coins high.

3.         Delegated Proof Of Stake (DPOS)

Delegated Proof Of Stake (DPOS) is a very fast consensus mechanism and most known for its implementation in EOS and is often referred to as a digital democracy, thanks to its stake-weighted voting system. In a DPOS system users can stake their coins to vote for a certain amount of delegates. The weight of their vote depends on their stake, for example, if A stakes 10 coins for a delegate and B stakes 1 coin for a delegate, A’s vote weighs 10 times heavier than B’s vote.

4.         Practical Byzantine fault tolerant Mechanism:

Distributed networks could use Practical Byzantine fault-tolerant (PBFT) mechanism. Every node distributes a public key. Messages getting through the node are designated by the node to confirm their organization. When enough indistinguishable reactions are achieved, at that point a consensus is met that the message is a legitimate transaction.

5.         Proof of Burn

Value of one digital currency can be exchanged then onto the next through the Proof of Burn (PoB) mechanism. This implies a node takes part in a lottery to choose the status of the blockchain by burning value they as of now hold, as another cryptographic money, for example, bitcoin or ether. To locate the following block, the node transfers bitcoin, ether or some other digital currency to an unspent address. In return, the node gets a reward in the coins local to the Blockchain it supports to sustain.

6.         Proof of Identity

Proof of Identity (PoI) is cryptographic evidence (piece of data) which tells that any user knows a private key that compares to an authorized identity and cryptographically attached to a specific transaction. Every individual from some group can create a PoF (only a block of data) and present it to anyone for instance to the processing node.

7.         Proof of Importance

The primary cryptographic money platform to execute Proof of Importance (PoI) was NEM. With PoI, it isn't just the coin balance that values. NEM's consensus network depends not only the number of coins but on the possibility that productive system action ought to be remunerated. The chances of staking a block are a component of various factors, including notoriety (controlled by a different purpose-designed framework), balance, and the number of transactions made to and from that position. This gives a more all-encompassing image of a 'helpful' system member.

8.         Proof Of Elapsed Time (POET)

Proof Of Elapsed Time is a consensus mechanism that aims to randomly and fairly decide who gets to produce a block based on the time that they have waited. To decide who gets to produce a block, the process assigns a random wait time to each node. The node whose wait time finishes first gets to produce the next block.

9.         Proof of Capacity (POC)

Proof Of Capacity is a consensus mechanism that uses a process called plotting. With Proof of Work miners use computational power to guess the correct solution, with Proof Of Capacity however, solutions are pre-stored in digital storages (like hard disks). This process is called plotting. After a storage has been plotted (meaning it has been filled with solutions) it can take part in the block creation process.

Whoever has the fastest solution to the puzzle of a (new) block, gets to create the new block. The more storage capacity you have, the more solutions you can store, the higher your odds of creating a block are.

Conclusion

In the absence of a consensus mechanism there would not be decentralized peer-to-peer systems which are tolerant of the Byzantine Fault. While PoW and PoS are popular, there are numerous variations of consensus mechanisms each achieving the same objective albeit using different methodologies. The choice of consensus mechanism process ought to be made based on the prerequisites of the particular project. It must be noted that there is no perfect consensus mechanism.

 The author is a Certified Blockchain Expert and a member of Crypto Tamanga, a community of blockchain technology and cryptocurrency enthusiasts in Zambia.