Understanding what consensus mechanism are and what they do can be a difficult task for those not in touch with blockchain technology.
However, as you get involved with specific coins, you will certainly need to understand how things operate behind the scenes and how proof of work, proof of stake, and many other mechanisms work, so let’s get to it!
Afterall, if you want the dough to rise, you'll need proofing.
What Are Consensus Mechanisms?
Consensus mechanisms can greatly vary in form but must always achieve, as the name clearly puts it, consensus.
As such, and to put things in simpler terms, a consensus mechanism is a fancy way of saying “this is the way we are going to do things to make sure everyone is on the same page.”
In turn, when applying that concept to the blockchain and cryptocurrencies, it means that people agree on the state of blockchain, a state which can include individual transactions, data, smart contracts, and so forth.
While some people tend to focus on the 2 biggest ones, there are many other different models of achieving consensus.
As such, by knowing these 6, even if just briefly, you will certainly get a clearer picture of how all the big coins are handling things.
Proof of Work (PoW)
Arguably the most famous consensus mechanism, the proof of work mechanism, is employed by Bitcoin.
The main idea behind proof of work is to use a computer to prove that it put in a lot of work and, the more work you put in, the better the chances of winning a block reward.
Anyone can participate with his or her computer, but the more powerful computers one has, the more likely they are to win blocks.
One of the main reasons for proof of work works so well is that if one wanted to attack the network to, for example, give him or herself free tokens, he or she would then have to control 51% of all the computer power, making it nigh impossible to do so as trillions of dollars would be necessary to achieve such a feat.
Proof of Stake (PoS)
The easiest way of conveying the difference between the Proof of Work and the Proof of Stake mechanisms is that in PoW competition makes it so that only the one who crosses the finish line gets his or her reward, while in PoS only one participant gets chosen.
This makes it so that when dealing with the PoW consensus mechanism one must consider that participants who are putting their work in may simply not get anything in return, making it very similar to a luck game.
When comparing these two mechanisms, one can easily see that Proof of Stake keeps its energy consumption to a minimum.
As for the 'stake' part, in order to participate, one must stake a predetermined number of coins which you have to lock up to inform and allow the network to select him or her.
The more you stake, the more likely you are to be selected for the next block.
Locked up tokens can be taken away from participants if bad misconduct or mischief is found. As such, participants are greatly incentivized not to lie.
Delegated Proof of Stake (DPoS)
Very similar to PoS, but instead of anyone becoming a validator, he or she can use their coins to vote on someone else to become one.
By doing so, a person who might not have a stable internet connection or a round-the-clock working computer can still lock up their coins, vote on someone who has better conditions, and earn staking rewards without having to set up a validator node.
The DPoS thus achieves democracy on the blockchain as delegators trust that people will vote on their behalf. Moreover, this way, validators are ensured to be reputable and trustworthy.
Proof of Space and Time (PoST)
Also known as Proof of Capacity, the PoST is a consensus mechanism which uses digital storage space as a requirement to participate in the network.
In short, these models set up a way to put information or encrypted data on participants' hard drives and will periodically and randomly check to see if it is still there.
Participants are paid in the network’s native coin for their work in storing data.
Proof of Weight (PoWeight)
The PoWeight considers some value of weight as a means of attributing rewards. It can ponder on things, such as how many coins a user has in his or her wallet, how long he or she has them, how much data are they storing, and so forth.
Proof of Authority (PoA)
The PoA consensus mechanism, also known as proof of reputation, is derivative of the proof of stake mechanism.
However, participation isn’t open to anyone who wishes to do so. Instead, the PoA method only employs a few select nodes. These are reliable, trustworthy nodes which aren’t usually anonymous.
Wrapping up
As William Golding once wrote in the classic novel Lord of the Flies: “We need an assembly, not for cleverness, but for setting things straight.”
As you’ve probably figured out, the consensus mechanism somewhat does both things as it is a very clever way of setting things straight.
Accordingly, if you understand how each mechanism works, you’ll be much better able to navigate through blockchain tech and cryptocurrency overall.
