Sometimes, developments or other aspects related to the other two aspects will interest the cryptocurrency community. However, since blockchain technology is such an integral part, there is a high possibility that its advancements could lead a crypto asset professional away from crypto assets on Blockchain. But what is the correlation between blockchain and consensus?
It’s still a warm memory, the way that the implementation in the algorithm for Proof of work on Bitcoin blockchain was able to turn crypto enthusiasts disengaged from the most coveted cryptocurrency assets. A reason is that the consensus method of Proof of work is thought unsustainable since it uses a significant so much energy.
Understanding the Consensus Algorithm
In short, it is an algorithm employ by computers and blockchain systems to agree with the inclusion of new information within it.
The ledger is accessible and is visible to everyone; however, it is extremely difficult to alter. Blockchain users are not able to alter the transactions contained within it. However, they can add a new transaction block. But, the transaction block will only add when the consensus algorithm agrees with the inclusion of the transactions.
So, why is this procedure necessary in a blockchain-based system?
As we are aware, no one authority oversees the activities of the world of crypto. Instead, the entire system creates by a decentralized method until the decision-making or verification. Therefore, authentication, verification, and decision-making in the Blockchain include every user part of the system.
But, having hundreds of thousands or millions of users requires a fair, efficient, secure, reliable, and safe process to ensure that all parties taking part in it have an equal “voice.” To achieve this, it is necessary to have a consensus algorithm for the system of Blockchain.
Furthermore, it is also the only source of information regarding whether transactions performed by the user are authentic or fake. This prevents the users from recording their transactions in two places which a often referred to as double-spending.
Different kinds of Consensus Algorithm
1. The Proof of work
Consensus Proof of Work is the “father” of all types of consensus algorithms. This algorithm was first utilized in the Bitcoin blockchain and later adopted by many early-generation altcoins.
In the Proof of Work concept, miners function as the transaction’s validators. They can add blocks to the Blockchain when they can solve difficult mathematical problems. If they’re successful and can provide “proof of their hard work” (aka Proof of their efforts), They can include a new block into it.
Unfortunately, this type of algorithmic process can result in massive costs. Every miner requires a reliable computer system to meet the demands of other miners or bitcoin mining. In the meantime, they must pay a large amount of money to purchase the equipment.
Not just hardware investments as well, they also need to pay for expensive electricity. But, again, this is due to the puzzle-solving process being very long.
2. The Proof of stake
The other consensus-based algorithm that use can describe as Proof of Stake (PoS). This algorithm implement by new coins, such as Cardano and Ethereum, later upgraded towards Ethereum 2.0.
In the Proof of Stake system, participants do not need to purchase hardware. In exchange, they require to invest in crypto instead. What’s the reason?
Proof of Stake is a concept in which an individual can mine or verify the transactions of crypto assets based on the number of coins they hold. This means the more coins miners hold thus the higher the bargaining power when mining crypto assets.
Contrary to Proof of work, which requires a high-powered machine, however, Proof of stake can accomplish using simple computers. First but, you must protect your cryptocurrency in the form of a wallet. The coins could later use to decide whether a new transaction merits registers in the Blockchain or not.
If the trade is negotiating and the validity and confirmation, the person who signed it will receive a fee payment. However, if a valid person attempts to behave in a manner that is not appropriate or squander the currency used to stake, money can a stolen.
The process regarding as quicker and cheaper as compare to PoW consensus. This is why ADA enjoys high trust from crypto investors, so it is likely to be in the top 10 crypto coins based on the market value of cryptocurrency assets.
3. Delegated Proof of Stake (DPOS)
DPOS (Delegate Proof of Stake) or Proof of stake that has delegate or utilizes an electoral system for voting like DPOS. For instance, a Blockchain developer named Dan Larimer discovered the DPOS system, founder of Blockchain Bitshares, Steem, and Eos. Vexanium Based Blockchain utilizes the consensus (DPoS) to choose active Block producers who are legally authorized to validate the correctness of blocks within Blockchain. Blockchain network.
However, on the Vexanium Blockchain, the DPOS process occurs at Layer 2 and is just half that is part of Vexanium consensus. The other half takes part directly in verifying every block until it becomes final (irreversible). This is done using asynchronous byzantine fault tolerance (aBFT).
Of the various types of consensus mentioned above, the consensus algorithm is the one that makes the nature of the blockchain network adaptable. There isn’t one blockchain algorithm that claims to be the best or best value. Each consensus comes with its benefits. This is the appeal of Blockchain technology. It’s different to come to an agreement (deal) using an algorithmic system of mathematical computation.
The header information will randomly choose an assortment of participants who wish to sign or verify blocks. A validator who holds an increasing number of coins will be selected as a signer. When all validators have verified the new block, the status of the Blockchain is different from the block that was discovered to the complete block. The block is then analyzed as part of the Blockchain. Validators and miners involved in the block earn mining rewards that will be separate for miners and validators.