There is an ongoing wage of war revolving around different blockchain consensus, the recent ICO craze saw the rise of many startups form around a type they believed to have better qualities and advantages.

With the tech in need of a breakthrough consensus type, research and proposed solutions continue to be experiment with.

This post will focus on each aforementioned Consensus type, how they function, the method of their process, their strength and weakness and how they could be compared.

But before I proceed, let me give a little briefing on ‘Why blockchain need a consensus‘ in the first place.

 

Role of Consensus in a Blockchain System

For a particular blockchain system, every node in the network must run the copy of the blockchain. Since blockchain is a decentralized system each node should be regularly updated to maintain a valid state in the network. Here is where consensus comes into the matter. Consensus create a path where nodes can communicate with each other effectively to affirm each is in a valid state and ensure new record added represents the most current transaction on the network, preventing double spending and other invalid data from being added to the system.

It can be liken to the role of blood to regulate temperature and other regularities in the body.

Nodes are able to secure the network because they are constantly in agreement with each other because of the acting Consensus rule.

Consensus Make Blockchain Tech possible

Type of Consensus Explained.

Proof of Work (PoW)

Bitcoin blockchain popularise PoW concept by adopting its role as a consensus, to many – the founder of bitcoin coined this concept, but in truth – the idea of “Proof of Work” was first published by Cynthia Dwork and Moni Noar in 1993 journal article, however it wasn’t until 1999 the actual term “Proof of Work” was coined by Markus Jakobsson. Source

Adopting Proof of Work as the base framework of the bitcoin blockchain is arguably the central idea necessary for Bitcoin, as it allows for trustless and distributed consensus. This working concept run in such a way that the only viable way to endanger and gain majority control of the system is through 51% attack i.e a single entity needs to control 51% percent of the total mining machine/node and their equivalent energy input of the total system.

Bitcoin ‘Proof of Work’ is carried out by miners – sophisticated computers that uses their computation power to solve complex mathematical problems.

Miners are the backbone of the bitcoin blockchain.

How Bitcoin Mining Works

  • A list of transactions are collected into a memory pool (mempool).
  • Miners confirm each transaction in the mempool is legitimate by solving a mathematical puzzle
  • The first miner to solve the puzzle gets rewarded with newly minted bitcoin (the block reward) and network transaction fees..
  • The verified mempool, now called a block, is added and broadcasted to the blockchain. Source

The Proof of Work mathematical puzzle define the system by some of these features:

  • The puzzles are unpredictable, difficult to solve but easily verified.
  • It requires no special skill to solve, but the use of brute force. This restrict some miners from taking unfair advantage over others. The only way for a miner to increase their chance is to acquire additional computational power; something that is very energy and capital intensive.
  • The puzzle parameters are regularly updated in order to keep the block time consistent. The Bitcoin protocol, for example, has a block generation target time of 10 minutes. So for example, if the average block time over two weeks has decreased to below 10 minutes, the network will automatically increase the difficulty. This, in turn, increases the number of calculations and the average time required for the puzzle to be solved, thus, the computation power required from miners. Source

Cons

Though, Proof of Work concept made the notion of a blockchain become a reality as it was a good solution which Satoshi was fascinated about that could combine cryptographic signatures, merkle chains, and P2P networks — into a viable distributed consensus system, of which cryptocurrency is the first and basic application, was quite innovative.

Concerns are now being raised on whether it is really sustainable. As the difficulty level of the blockchain rises so is it computational demand. This demand has risen to a level that is considered not eco-friendly. Imagine the bitcoin mining process consuming the same power supply per year as a whole country with a fairly-stable power as Colombia in a year.

In fact this effect is considered one of the weak spot that could deter the rise of cryptocurrency as miners may stop operating when mining isn’t profitable anymore.

Proof of Stake (PoS)

Proof of Stake Consensus algorithm uses the stake in addition to other parameters of validators in the system to achieve Consensus. Stakers also known as forgers verify transactions and use their stake to secure the network. As oppose to PoW where reward are created with new blocks, PoS reward a chosen validator at a consensus round through the transaction fees generated at that period. Why? Because instead of the continuous generation of coin with every new block, the total cryptocurrency of the system is generated right from inception. This is to enable the system make important decisions and calculations which are needed to correctly appoint the right validator for each consensus round and other important process.

Stake in a PoS system refers to the amount of the native coins a forger is willing to stake on the network. The amount of staked coins determines how influence and power is distributed in the network i.e a forger with 80 coins would have more influence than that of a forger with 30 staked coins. This comes from the believe that large stakers have good Intentions of securing the network by risking their wealth. This does not say a bad actor can not also purchase a large stake to game the network; reason why other parameters such as the account age, trust level which is calculated base on history of successful good contribution made to the network, may also be considered.

Pros

A major pros of the Proof of Stake system is higher energy efficiency. By cutting out the energy-intensive mining process, Proof of Stake systems may prove to be a much greener option compared to Proof of Work systems. Additionally, the economic incentives provided by Proof of Stake systems may do a better job of promoting network health. Under a Proof of Work system, a miner could potentially own zero of the coins they are mining, seeking only to maximize their own profits. In a Proof of Stake system, on the other hand, validators must own and support the currency they are verifying. Source

Cons

Although PoS is highly praised for it’s energy efficiency, this consensus type is criticised for the way it is mostly beneficial to the rich as ‘the more the stake the more the power and influence’.

Delegated Proof of Stake (dPoS)

This consensus type looks similar to PoS but is in fact entirely different with the way it is carried out. Instead of individual staker personally choosing to partake in securing the network through his/her stake which is accounted to only him/her in PoS. dPoS turn this around by adopting a more decentralized approach where every person in possession of the native cryptocurrency can vote for a representative who is qualified to validate transaction and create blocks. These representative are known as block producer or witness.

Popular examples of project using dPoS are EOS, BitShare and Steem. In Steem and EOS systems, 21 witness are needed for a consensus round, where the top 20 form the crew of major/important witness who are paid regularly for their work and time in securing the network, the 21st witness is chosen randomly from a list of 80+ backup witness whose existence provide both competition and readily available options in case a top producer suddenly become lax or negligence of duty.

How users vote are regarded depends on their stakes i.e a user with a 50 staked coins vote will carry more weight than that with 20 staked coins.

Though, witnesses are responsible for securing the network and validating transaction, they cannot themselves change the details of a transaction. They could be compared to miners as in PoW.

dPoS consensus type was a good solution to limit power consumption, as an ordinary PC (run by a witness) is all that is needed to represent a node that performs the work of the witness.

The way dPoS is structured also enable a highly efficient, fast blockchain system. Taking the Steem blockchain for example, new block is produced every 3s whereas, it takes bitcoin 10 minutes to produce a new block in the bitcoin blockchain. That gap between block producing time is really outstanding as it give room for transactions to be packed and processed faster.

Cons

Although, dPoS took decentralization as a top priority by leaving the network fate in the hand of its user/community, human greed and selfishness are proving to be a weak link that could distort the working idea through vote bribing and cartels.

Delegates

Apart from witness who validate transactions and produces new block. There are delegates who oversee the governance and performance of the overall blockchain protocol. Users are also responsible to cast vote for delegates.

Proof of Reputation (PoR)

PoR is somewhat similar to PoS, only that the reputation of network participants is at stake if any is caught in a malicious act, as oppose to “I have nothing to lose” in a PoS system. PoR can be liken to PoA (proof of authority) and PoI (proof of importance), but the actual difference is the way participants are kept at watch by each other.

This consensus model is exclusively meant for companies that find a reason to run a public distributed network. A brand reputation must be high enough before it can be assigned as a validator in the network. Each participant is watch over by other participants in the network to ensure a fair operation. Any validator could be voted out by the majority if obvious evidence are dug up that attest to a violation of the system.

Cons

As much as watching-over by particicpants/competitors is crucial to maintain stability in the network, it may lead to a major downfall of this consensus type. Humans will always have a reason to conflict with each other, this act is found in many areas of life, especially in the business sector due to the ever going competition in a particular niche.

One of the solution to mitigate this effect will be to onboard validators that have no obvious or hidden reason to game one another or to onboard business that have a common goal to achieve but are in need of a transparent avenue to carry out their operations.

Conclusion

All of the consensus type mentioned in this post have their strengths and weaknesses, PoW is considered as an environmental hazard, PoS is castigated for the way it would be enriching the rich only, dPoS despite it theoretical completeness and efficiency have a hard time holding a strong ground in a human community filled with many motives and behaviors, PoR also have a major problem to solve by mitigating conflicts and reprobation.

Therefore, the race to build that revolutionary Consensus model continues to intensify. Any organisation who is able to achieve that feat would do a lot than more personal good by building the future we all wanted and have been waiting for, as it would open up the big potential currently locked up in our ground breaking Blockchain technology.

Do you think the time to achieving this is near, I would like to know about your vision in the comment section below.

Images credits: copyright free imgages from pixabay.com

Useful References

https://hackernoon.com/consensus-mechanisms-explained-pow-vs-pos-89951c66ae10

Blockchain Consensus Explained

A Revolution Database

The Disruptive Tech

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