What Is Consensus Algorithm?
In computer science, the consensus algorithm is essential. Computers utilize it to establish an agreement on a particular data value point. It’s only used in systems or processes that are distributed.
Blockchain or bitcoin may have introduced you to the consensus algorithm. Today, we get the opportunity to learn more about the topic and its significance in distributed systems.
What is the consensus algorithm, and how does it work?
- The use of a consensus algorithm.
- Consensus algorithm types
- Let’s get this party started.
When a distributed network requires consensus, it is uncommon for all system nodes to be online at the same time. There’s also the possibility that some data will be lost during transmission. The consensus algorithm overcomes the most significant issue that a distributed or multi-agent system faces. It ensures that consensus is reached with the least amount of resources while maintaining integrity and transparency in its choices.
The consensus technique just requires a response from 51 percent of the resources at a time to ensure that the entire system is fault-tolerant. Let’s look at an example of a PoW consensus algorithm to see how it works. A user sends 0.2 bitcoins (BTC) from one wallet to another. The miner mines the block that the transaction needs to be in to ensure that it goes through. The miners will now begin mining the block. It will be validated after a while when the system performs the bare minimum of validations. In the case of BTC, only six validations are required to reach a consensus.
There are many different forms of consensus algorithms. This means that the system’s internal workings are determined by the consensus algorithm employed.
Uses of Consensus Algorithm
The consensus algorithm can be used in a variety of ways. Although it is primarily employed in decentralized systems, it can also be used in centralized systems. Some examples of how the consensus algorithm is used.
The algorithm’s most basic application is determining whether or not a transaction in a distributed environment needs to be implemented. The majority of blockchain networks use it. The consensus algorithm can also be used to designate a node as a leader. Finally, but certainly not least, they are utilized to synchronize data across the decentralized network and assure consistency.
Consensus algorithms come in a variety of shapes and sizes.
Consensus algorithms come in a variety of shapes and sizes. Only the most well-known ones will be discussed in this article. So, without further ado, let’s get this party started.
(1) Proof of Work (PoW)
Proof of Work is the most widely used consensus algorithm. Bitcoin, Litecoin, and Ethereum use it. Satoshi Nakamoto first designed it for use in his Bitcoin implementation. It is, however, the most inefficient method of achieving consensus in a blockchain because it necessitates a significant amount of computer resources. It functions by requiring miners to answer difficult mathematical puzzles. The block is mined, and the transaction is validated at the same time when the hash is solved.
They build blocks, which are then added to the blockchain by solving. For this to operate, at least half of the effort must always be truthful.
(2) Proof of Stake (PoS)
Proof of Stake is the second most popular consensus algorithm. Peercoin, Decreed, and Ethereum are all using it. Staking coins in a wallet is how it works. When a consensus needs to be reached, the nodes who have staked their currencies will have a say. The advantage of PoS is that it does not require a lot of processing power.
A staking node loses its stake if it fails to vote for the proper transaction. If it succeeds, it will have a greater chance of staking in the next transaction. In this situation, the spending resource is the tokens themselves.
Also, read – APPLICATIONS AND USE CASES OF BLOCKCHAIN
The difference between PoW and PoS was recently discussed. PoS, like any other consensus algorithm, is not without flaws. It’s called “Nothing on the Line.” It works by validating both fork sides.
(3) Delegated Proof of Stakeholder (DPoS)
Although Delegated Proof of Stake sounds similar to PoS, it takes a different technique. The first point of distinction is that DPoS is not completely decentralized. The stakes do not validate the blocks in this scheme, but they do choose delegates.
Any decentralized system, in general, has 20-21 delegates that validate transactions. These delegates then validate each transaction. This makes DPoS extremely efficient, and it’s why EOS, Steemit, and other platforms use it.
(4) Proof of Authority (PoA)
Proof-of-Authority is the final consensus algorithm we’ll talk about. It’s for a completely centralized system. This means that network validations are performed by approved accounts (selected by the system administrators). Because of its centralized character, it is mostly employed in private networks.