Code

As we all know that <a href="https://lumbytes.com/post/blockchain-simplified">blockchain</a> is a distributed, decentralized and immutable shared ledger of transactions, with nodes spanning across the globe.&nbsp;All the nodes also contain an entire copy of the blockchain on which they perform their operations. These nodes may also suggest different solutions for the new block to be added.

We also know that blockchains also maintain a common state(a common chain of blocks) for all the nodes.

In this scenario, a question that arises is - With the network of millions of globally distributed nodes, each one performing its operations at different time intervals, how does the blockchain network ensure a common state for all these nodes?

This problem is handled by the Consensus Algorithm used by the blockchain.

A consensus algorithm is a fault-tolerant procedure used in blockchains, through which all the nodes achieve an agreement for the common present state of the blockchain network.

Consensus algorithms maintain integrity and security in the network. They also help to establish trust among peers in a trustless environment.

They also make sure that any new block being added to the chain during the minting process is the same block being adopted by all the nodes in the network and thus maintaining a single source of truth agreed upon by all the nodes.

Now that we know what consensus algorithms are and what is their role.. let us find out what will happen if no consensus algorithm is used in a blockchain.

What will happen if no consensus algorithm is used?

A deep dive into 2 most popular consensus algorithms

There are many standard consensus algorithms used by different blockchains. Blockchain projects sometimes also come up with their own invented algorithm. These algorithms have different working mechanisms and principles but ultimately a common goal.

Proof-of-Work (PoW) is the oldest consensus algorithm developed by the pseudonymous identity "Satoshi Nakamoto" who is also regarded as the inventor of the Bitcoin blockchain. Proof-of-work is used by some popular blockchain networks such as bitcoin and ethereum.

In PoW algorithm all the nodes compete against each other to find a solution for a complex mathematical problem, the node that solves the problem first eventually adds the block to the blockchain and earn the reward.&nbsp;

It is the most energy-consuming algorithm because all the power consumed by the rest of the nodes to find the solution is actually wasted.

Proof of Work is a consensus algorithm that helps blockchain networks to assent to a certain state of the network and remains robust.

Proof of Work (PoW) consensus algorithm.

Proof-of-Stake (PoS) is a low energy consuming algorithm. It is much more efficient that proof-of-work algorithm. Here, a validator is randomly chosen on the basis of amount of virtual currencies hoarded by the node. Therefore, the nodes that owns more currency has higher probability of receiving the validator responsibility and thus the reward.

This algorithm leads toward the centralization of power and promotes the holding of resources rather than spending.

The Ethereum 2.0 has adopted the PoS algorithm, discarding the PoW algorithm which is used in the previous version of the Ethereum blockchain, to reduce the wastage of electricity and natural resources.

Blockchain is a distributed, shared and immutable ledger of transactions that is duplicated across every node spread across the globe.

What is blockchain technology?

A consensus algorithm is a procedure through which the nodes of the blockchain come to a common agreement regarding the present state of the network.

Code

What are the consensus algorithms in blockchains?

Share

Vishesh Dhawan

Read more

Vishesh Dhawan

May 19, 2022

Proof of Work (PoW) consensus algorithm.

Vishesh Dhawan

August 10, 2021

What is Decentralized Finance - DeFi?

Vishesh Dhawan

July 19, 2021

Best programming languages for blockchain development in 2022.

Vishesh Dhawan

July 19, 2021

What is blockchain technology?