Consensus mechanism and how it works | #cybersecurity | #cyberattack | #education | #technology | #infosec

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The consensus models are decisive factors when it comes to efficiency and scalability of cryptocurrencies. But how does the consensus mechanism work? We break down this crypto jargon for you to grasp its working and benefits.
What is the consensus mechanism?

Consensus mechanisms are multiple programming used to achieve consensus and faith of the users on a network of computers by ensuring genuine and secure crypto transactions across the decentralized blockchain technology.
In a distributed ledger, consensus means ensuring 51 percent of the network nodes agree to the network’s current condition. This ensures three things: it reduces cyber attacks by 51 percent, as the hackers need to get control of 51 percent of the network to launch attacks. Also, models are fault-tolerant, which enable continuous functioning of the operating system even when one or two components fail. The consensus mechanism also maintains transaction records.
Here, the most popular consensus mechanisms that are employed by different cryptocurrencies to achieve specific features.

  • Proof of Work (PoW) – This is the most common consensus protocol used by 370 virtual currencies, including Bitcoin that was first to use it, according to CryptoSlate, an informational website on crypto.
    • PoW works on the principle of mining to get consensus on validating transactions.
      • Whoever solves the algorithm first, or mines a block of the currency gets to update the blockchain with a verified transaction and earns a crypto for solving the puzzle.
      • Here, each miner acts as a node, which are also governing bodies that verify the transactions on each block.
    • It is called Proof of Work as heavy usage of computational power is used in it, which is also its major demerit.
    • PoW is highly secure and is strengthened as more miners join the network.
    • It has scalability issues, high transaction fees besides the inability to support high user traffic.
  • Proof of Stake (PoS) – This does not involve solving mathematical problems in order to mine new coins, but instead uses staking.
    • Staking means to lock in coins already owned by individuals within the network in order to earn new coins that are mined by the exchange.
    • PoS fixes the scalability issue and is eco-friendly unlike PoW.
    • Those owning fewer coins will have lower mining and transaction validating power on the blockchain.
    • The PoS model makes the 51 percent attack difficult due to staking.
    • It, however, encourages the hoarding of virtual currencies rather than spending.
    • Ethereum aims to shift to this model in its Ethereum 2.0 upgrade. Cardano and Polkadot are already using it.
  • Delegated Proof of Stake (DPoS) – It is an evolved version of the PoS model.
    • Here, users stake the coins like PoS but delegate the work to a group for reaching a consensus between themselves and validating transactions.
    • Delegates can be voted out or voted in, based on their reputation.
    • DPoS enables faster transactions than PoW and PoS based blockchain.
    • Bitshares, Steem and Ark use it.
  • Proof of Capacity (PoC) – This model requires nodes to use the hard disk space of the user for storing the possible solutions even before the actual mining starts. It is a greener option than both PoW and PoS.
    • A greater hard disk storage means more solutions and more possibility of earning mining rewards.
    • The hard disk space decides mining rights to validate transactions on the ledger.
  • Proof of History (PoH) –
    • Solana developed the PoH mechanism.
    • It allows the validators on the network to compute the state of the network by the ledger itself.
    • It is based on cryptographic time-sampling.
    • PoH makes Solana the fastest blockchain at up to 65,000 tps at a mere transaction fee of $0.00025.

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