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Review of the Six Types of Blockchain Consensus Mechanism

By ESC Editorial Team, over 5 years ago Business
Review of the Six Types of Blockchain Consensus Mechanism

Many people have started to trade different cryptos but most have no idea of how the cryptocurrency is getting from one account to the next. Here is an explicit explanation:

"There is a decentralized group of nodes or users that support each blockchain called miners. They are performing difficult computing tasks in order to be rewarded with the particular cryptocurrency they are supporting." 

[Check the source of quote from How Does Crypto Mining Work originally published at MINTDICE to learn more about crypto mining]

Blockchain accompanies the birth of Bitcoin and is its basic technical architecture. 

For a decentralized digital currency system such as Bitcoin, where there is no central node to ensure billing consistency for each node, Blockchain is required. Blockchain is a kind of decentralized accounting system based on the Internet. Its technical core is a consensus mechanism on the legitimacy of transactions between individuals who do not trust each other without centralized controls. 

Currently, there are six main consensus mechanisms in the Blockchain: Proof of Work (PoW), Proof of Stake (PoS), Delegated Proof of Stake (DPoS), Practical Byzantine Fault Tolerance (PBFT), Delegated Byzantine Fault Tolerance (DBFT), and Pool verification-pool. 


Proof of Work is the first generation consensus mechanism and the foundation of Bitcoin. In simple terms, how much you get paid depends on your workload (cryptocurrencies like Bitcoin). The workload here is the computing service you provide for the network (computing power *time). The service process is called mining. Miners place an existing transaction that has not yet been recorded on the network into a block, and then constantly try to find a random number. The new block is combined with the hash value of the random number (Hash Function: converting the information into a simplified one by a certain method) to satisfy certain conditions. For example, the first ten digits are zero. The random number that satisfies the condition determines the latest block in Blockchain and the bookkeeping rights of Blockchain in the current round. 


(1) The algorithm is simple and easy to implement. Although the mechanism is complex, its details are based on economics principles that can attract and encourage more people to participate. 

(2) As long as the cyber saboteur's power does not exceed 50% of the network's total power, the network's transaction status can reach a consensus. In other words, the destruction of the system requires a high cost. 

Disadvantages: Since Bitcoin has attracted most of the global computing power, it is hard for other blockchain applications that adopt the PoW consensus mechanism to obtain the same computing power to protect their own security. 

(1) Bitcoin mining is currently causing a lot of waste of resources

(2) The PoW consensus requires a long time. Up to 7 transactions can be executed per second, which is not suitable for commercial applications. 


Proof of Stake is a distributed consensus mechanism that requires a node to provide certain evidence of certificate tokens to obtain the accounting right to record blockchain competitions. 

In the terms of PoW, the computing power is greater and the probability of mining a block is larger. While in PoS, the balance is the main competition key. In other words, miners who own more money are more likely to find a block. The rich, relying solely on the token account balance, will inevitably win the accounting rights. The centralization of accounting rights reduces the fairness of the consensus. Therefore, different PoS mechanisms, in addition to the proof of stake, use different methods to increase the randomness of the accounting rights to avoid the centralization. 

For example, in the PoS mechanism of PeerCoin (which was released in August 2012), the Bitcoin with the longest chain is more likely to get the accounting right. NXT and Blackcoin (both block chain application platforms) use a formula to predict the next accounting node. The tokens are more, the likelihood of being selected as an accounting node is greater. 

The shorter time for achieving consensus reduces the waste of resources as in the PoW mechanism. 

 The cryptocurrency of the pure PoS mechanism can only be issued via the ICO (initial coin offering). As a result, a small number of people (usually developers) will receive a large amount of cryptocurrency at an extremely low cost and there is a risk of manipulation of the main chain and account tokens. 


The Delegated Proof of Stake is similar to the board voting. The shareholders voted for a certain number of delegates, and the top 100 delegates produce blocks according to the set schedule. All delegates receive 10% of the average transaction fee of a block as compensation. If the former delegate cannot generate a block within a given time, the right is transferred to the next delegate. Shareholders may vote at any time to replace these delegates. The design makes creating blocks faster and more energy efficient. 

It significantly reduces the number of verifications and billing nodes and achieves consensus verification in seconds. In this mode, a new block can be generated in 30 seconds. 


 (1) Little enthusiasm for voting. The vast majority of shareholders never vote. This is because voting requires time, energy and skills, which most investors lack. 

(2) High monopoly. PoS has almost no threshold, and anyone can get a block reward through competitive investment. The DPoS continues the drawbacks of the PoS and only coin holders can obtain blockchain rewards. This will create an institutional threshold that will ultimately lead to a drastic reduction in the liquidity of the DPoS currency. The rich get richer, the poor get poorer. 


In distributed computing, different computers are trying to reach a consensus through information sharing. Sometimes, however, a coordinator/commander or member/Lieutenant may share incorrect information due to a system error, which affects the consistency of the final system. 

Under the consensus mechanism of Practical Byzantine Fault Tolerance, each node will list all the information after the exchange between nodes in the network. The final decision is determined based on the total decisions from all parties. The core theory of the PBFT algorithm is n>=3f+1. n is the total number of nodes in the system. f is the number of nodes that are allowed to fail. In other words, if the system allows f faults, then the system must include n nodes to resolve the faults. 

Advantages: The reliability of the algorithm has strict mathematical proofs with (n-1)/3 fault tolerance. 

Disadvantages: When 1/3 or more of the bookkeepers stop working, the system can no longer provide services. 


Antshares originally developed a delegated Byzantine Fault Tolerance algorithm that has been greatly enhanced based on PBFT. Depending on the proportion of shareholders choosing the account holders, the bookkeepers can reach a consensus through the Byzantine fault tolerance algorithm. 

*NOTE: Antshares is a decentralized network protocol based on blockchain technology that digitises the assets and the equity of the physical world. 


(1) Digital certificates are introduced into the blockchain to solve the authentication problem of the real identity of accounting nodes in voting. 

(2) It can tolerate any type of errors. The disadvantage is the same as PBFT. 

Pool Verification-Pool 

Pool verification-pool is based on traditional distributed consistency technology and complemented by data verification mechanisms. It is a consensus mechanism that is widely used in the current blockchain.

Advantages: Based on proven distributed consensus algorithms such as Pasox and Raft, to achieve consensus verification at the second level. 

Disadvantages: The degree of decentralzsation is not as good as Bitcoin. It is more suitable for multi-participant and multi-centre business models.

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