Blockchain consensus mechanisms allow distributed networks of computers to work together and agree on the state of the network.
Blockchain consensus is important as it establishes that at least 51% of the nodes, or computers, agree on the next step for a particular network. This consensus on the data is essential in an environment where strangers might not trust each other.
With centralized systems, an authority figure can make decisions and govern over updates unilaterally. This model does not work within the world of public blockchains as they function on a global scale and are the byproduct of contributions from countless participants.
Consensus mechanisms ensure public ledgers are fair, reliable, efficient, and help ensure transactions and activities on the network are genuine.
Good Consensus Mechanisms Share Vital Aspects – But Still Draw The Eyes Of Potential Attackers
A consensus protocol’s efficiency is based on three key features. Security is of utmost importance, and strong consensus mechanisms ensure nodes offer the same valid outputs. Fault tolerance is another important aspect. Legitimate consensus mechanisms ensure recovery if a node fails to participate in the consensus process. Finally, consensus protocols must ensure real-time value.
Unsurprisingly, hackers often scheme up ways to attack blockchain networks by disrupting consensus mechanisms. One common strategy is to launch a “51% attack,” where a group of miners controlling a network’s hashing power work together. Some might choose to deliberately fork transactions, double-spend, or launch attacks against specific services or addresses.
While attacks like these can be attempted by those with a smaller amount of hashing power, the 51% threshold is the point where any intrusion is essentially guaranteed to work.
Although this type of attack could lead to dire consequences, the dynamic nature of blockchain networks have introduced new security tools and countermeasures that reduce risks.
Understanding Leading Consensus Mechanisms Proof-of-Work (PoW) was one of the first consensus mechanisms. Miners must successfully solve complex puzzles on a new block before it can be approved. The solution is verified by other miners and added to their ledger copies.
While the idea of PoW has been around for a while, it was first implemented with the launch of Bitcoin. PoW remains popular due to its security and the possibility for miners to earn rewards.
PoW protocols set out specific conditions for block validity. As a result, competition among miners is fierce for some of the crypto world’s major blockchains. Many miners try to gain a competitive edge by investing in specialized hashing hardware and securing access to cheap and plentiful electricity.
However, the computational power needed to mine can quickly become expensive and require lots of electricity, a notable downside of the consensus mechanism.
Proof-of-Stake (PoS) is another consensus mechanism that was proposed in Bitcoin’s early days. Often touted as a PoW alternative, new block creators in a PoS system are picked based on their stake.
Stakers who lock funds will agree with other validators on transactions for the next block, and if successful, will receive a percentage of transaction fees based on the stake. Essentially, those who lock up more funds stand to gain more rewards. This could also pose a problem as large stakers could also wield an inordinate amount of power.
While PoS has largely only been deployed on smaller blockchains, the Casper implementation will eventually lead Ethereum into becoming a PoS protocol. PoS continues to grow in popularity because it requires less computational power than PoW and can process transactions faster with lower fees. There is no need for expensive or specialized hardware.
While Delegated Proof-of-Stake (DPoS) might seem similar to PoS at first glance – the two mechanisms are vastly different. Token holders in a DPoS system select delegates to carry out validation. If these delegates miss their blocks or publish invalid transactions, they can be replaced. Collaboration between miners and DPoS’ partially centralized process has helped the mechanism carry out orders faster.
Consensus Mechanisms Become More Robust And Customizable
There are a number of other consensus mechanism options. Mechanisms are often created to fulfill network requirements as they relate to scalability, speed, and security.
One example is Lycan Chain, an EVM-compatible blockchain with its own unique hybrid Proof of Stake consensus mechanism ensuring a scalable, secure, and fast network.
Lycan Chain features the unique ‘Proof of Bite’ consensus mechanism. With the system, validators refer (“bite”) delegators, with every referral leading to 1,000 Lycan coins being burned from the validator’s wallet to control supply. Lycan Chain also is home to the novel “hybrid proof of stake” architecture.
Unique consensus mechanisms continue to play an important role in the crypto and blockchain world to emphasize security and speed. A strong and efficient consensus mechanism ensures distributed systems keep working together and moving forward.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
