Consensus Protocols
Since cryptocurrencies are decentralized and not controlled by financial institutions, they need a way to verify transactions. One method that many cryptocurrencies use is Proof-of-Stake (PoS).
PoS is a type of consensus mechanism used to validate cryptocurrency transactions. With this system, cryptocurrency owners can stake their coins, which gives them the right to test new blocks of transactions and add them to the blockchain.
This method is an alternative to Proof-of-Work (PoW), the first consensus mechanism developed for cryptocurrencies. Since PoS is much more energy efficient, it has become more popular as attention has turned to how cryptocurrency mining affects the planet.
With FootballChain's decentralization and high throughput, token users will not need to worry about issues associated with multiple PoW tokens such as transaction count, chain congestion, centralized mining, and fees high transaction. FootballChain will maintain a high degree of decentralization due to its PoS algorithm. FootballChain relies on a predefined number of validators to facilitate the PoS of the consensus algorithm, resulting in shorter block times and lower fees.
- With PoS, cryptocurrency holders validate block transactions based on the number of coins the validator stakes.
- PoS was created to replace PoW, the original consensus mechanism used to validate a blockchain and add new blocks.
- While PoW mechanisms require miners to solve cryptographic puzzles, PoS mechanisms require validators to simply hold and stake the tokens.
- PoS is considered less risky in terms of the likelihood of an attack on the network, as it structures the compensation in a way that makes an attack less favorable.
- The next block writer on the blockchain is chosen at random, with higher odds being assigned to nodes with larger staking positions.
Proof of Work consensus is the mechanism of choice for the majority of cryptocurrencies currently in circulation. The algorithm is used to verify the transaction and create a new block in the blockchain. The idea of PoW was first announced by Cynthia Dwork and Moni Naor in 1993 and later applied by Satoshi Nakamoto in his Bitcoin paper in 2008. The term “proof of work” was first introduced. first used by Markus Jakobsson and Ari Juels in a 1999 publication.
Cryptocurrencies like Ethereum, Litecoin, and Bitcoin are currently using PoW.
Purpose of PoW:
• The purpose of the consensus mechanism is to bring all nodes to consensus, i.e. trust each other, in an environment where the nodes do not trust each other.
• All transactions in the new block are then validated and the new block is then added to the blockchain.
• The block will be added to the chain with the longest block height (see blockchain branches to understand how multiple chains can exist at a time).
• Miners (special computers on the network) perform computational work to solve a complex mathematical problem to add blocks to the network, hence the name Proof-of-Work.
• With time, the math problem becomes more complex.
Byzantine Fault Tolerance (BFT) is a feature of a distributed network to reach consensus (agreement on the same value) even if some nodes in the network do not respond or respond with incorrect information. The goal of the BFT mechanism is to protect against system failures by using collective decision making (both - the correct node and the failed node) in order to reduce the influence of the failed nodes. BFT is derived from Byzantine Generals' Problem.
pBFT attempts to provide an actual Byzantine state machine copy that can function even when malicious nodes are active in the system.
The nodes in a distributed system that supports pBFT are arranged in a sequential order with one node being the primary node (or leading node) and the other nodes being referred to as secondary (or backup nodes). Note here that any eligible node in the system can become a primary node by switching from a secondary node to a primary node (usually in case the primary node fails). The goal is that all honest nodes help to reach consensus on the state of the system using majority rule.
A practical Byzantine Fault Tolerant system can work provided the maximum number of malicious nodes is not greater than or equal to one third of the total number of nodes in the system. As the number of nodes increases, the system becomes more secure.
It can be understood that it is the detoxification mechanism of FootballChain's "body" when it encounters malicious nodes, even under attack. pBFT responds to malicious nodes by increasing nodes' ability to respond to clients.
Property | PoW | PoS | pBFT |
|---|---|---|---|
Identity management of nodes | Without permission | Without permission | With permission |
Energy saving | No | Partial | Yes |
Power tolerated | <25% computing power | <51% stake | <33.3% defective replicas |
Example | Bitcoin | Ethereum | Hyperledger |
Last modified 5mo ago