September 4, 2018

Consensus Algorithms in Blockchain - Part 2

Here’s the next selection of consensus algorithms – with a short description, that might be useful in your journey through blockchain. Now we take a dive into the more centralized solutions.

Dive into the more centralized but efficient world of blockchain consensus algorithms. If you're curious about the fundamentals of consensus algorithms in blockchain, be sure to review our introductory article:
>> Consensus Algorithms in Blockchain – Part 1

Delegated Proof-of-Stake (DPoS) Explained

DPoS stands out by allowing blockchain participants to vote for delegates who will validate blocks on their behalf. This unique feature offers several benefits:

  • Speedy Transactions: Experience rapid processing without the wait.
  • Cost Efficiency: Enjoy lower transaction costs compared to traditional methods.
  • Scalability and Energy Efficiency: Benefit from a system designed to handle more transactions without excessive energy use.

Projects like EOS and Steemit are leveraging DPoS to provide these advantages, although it does introduce a degree of centralization into the system.

The Mechanics of Proof-of-Authority (PoA)

Moving towards more centralized systems, PoA is where chosen administrators validate transactions. It's particularly optimized for private blockchains, offering:

  • High Scalability: Easily accommodates a growing number of transactions.
  • Superior Throughput: Ensures faster processing times for transactions.

While PoA may deviate from the decentralized ethos of blockchain, it can be a practical solution for specific business applications.

Understanding Proof-of-Weight (PoWeight)

PoWeight assigns the likelihood of mining a new block based on a value associated with the node, such as:

  • Stored Blockchain Data: More data can mean a higher chance of mining a block.
  • Customized Weights: Flexibility to define what value influences your mining probability.

Filecoin is a prominent example that uses the amount of IPFS data stored as the "weight" in its blockchain.

Byzantine Fault Tolerance (BFT) Demystified

BFT addresses the classic Byzantine Generals' Problem by ensuring network agreement despite potential traitorous nodes. It's a system used by Ripple and Hyperledger, known for:

  • Cost-Effectiveness: Low operation costs for maintaining the blockchain.
  • Scalability: Can grow without significantly increasing costs or complexity.

Although it can introduce trust issues, these are typically addressed through a certain level of centralization.

By reimagining blockchain's potential with these centralized consensus algorithms, we open up a new frontier for enterprise solutions that balance speed, efficiency, and scalability.

September 4, 2018