Blockchain Consensus Algorithms
A consensus algorithm may be defined as the mechanism through which a blockchain network reach consensus. In the world of crypto, consensus algorithms exist to prevent double spending. Here is a list of some of the most popular consensus algorithms up to date:
In Blockchain, this algorithm is used to confirm transactions and produce new blocks to the chain. With PoW, miners compete against each other to complete transactions on the network and get rewarded.
In PoS, the blocks aren’t created by miners doing work, but by minters staking their tokens to “bet” on which blocks are valid. In PoS-based cryptocurrencies the creator of the next block is chosen via various combinations of random selection and wealth or age (i.e., the stake).
Delegated Proof-of-Stake (DPoS)
Delegated Proof of Stake was developed by Daniel Larimer an American software developer, cryptocurrency entrepreneur and founder of BitShares, Steemit and EOS. He invented DPoS as an alternative to energy-inefficient consensus of Proof of Word and Proof of Stake.
Proof of Authority (PoA) is a reputation-based consensus algorithm that introduces a practical and efficient solution for blockchain networks (especially the private ones). The term was proposed in 2017 by Ethereum co-founder and former CTO Gavin Wood. The PoA consensus algorithm leverages the value of identities, which means that block validators are not staking coins but their own reputation instead. Therefore, PoA blockchains are secured by the validating nodes that are arbitrarily selected as trustworthy entities.
Every user on a network utilizing Proof-of-weight has a “weight” attached to them. This weight is based on how much money that user holds in their account. As long as the overall weighted fraction of the users are honest – usually two-thirds or greater – the network will remain secure. This method also protects the network from double-spend attacks.