Blockchain is a decentralized technology that provides a range of uses alongside cryptocurrency without regulation on integrity and security. Protocols in Blockchain ensure validity and safety of data to safeguard all transactions are legitimate and nodes are synchronized.

Consensus mechanisms check every transaction on the chain. Consensus mechanisms ensure all legitimate transactions are traceable and that each recorded copy contains valid or honest authorizations.

Types of Consensus Mechanisms, Their Benefits, and Drawbacks

Besides crypto, these protocols are the backbone of advanced blockchain, where nodes agree on smart contracts and big data. So, if consensus mechanisms are these essential components within Blockchain networks, what are the pros and cons of each different method?

Proof of Work

The most common consensus model is Proof-of-Work (PoW), a pioneer mechanism launched alongside Bitcoin by creator Satoshi Nakamoto. POW works on a public Blockchain, where miners with an all-time high (ATH) computing power solve cryptographic puzzles to mint coins and earn transaction fees.

Pros

• Secures transactions on the decentralized Blockchain
• More miners join the networks to boost system power and security
• Not feasible to tamper with PoW Blockchain

Cons

• Requires a huge amount of processing power
• Has a scalability issue due to time-consuming procedures

Proof of Stake

The main aim of developing the Proof-of-Stake (PoS) consensus is to overcome over-depending on the PoW protocol. This highly scalable protocol makes transactions faster, and costs, also called gas fees, are less.

In PoS, the maintenance of a public ledger, for instance, is delegated to a participant node, with trust allocated proportionally to the number of tokens owned.

Pros

• An energy-efficient alternative to PoW
• Quicker speeds of transactions and low fees
• Doesn't require specific hardware or equipment to participate

Cons

• Less secure or reliable than PoW

Proof of Authority

It's not as common as the last two, but Proof of Authority is unique as it uses vetted sources for network permissions with access keys. Decentralized financial organizations or DeFi entities use PoA as assurances based on authority and reputation rather than public consensus.

Pros

• Creates a secure environment
• Anyone can participate

Cons

• Potential for attacks
• The number of participants is small

Delegated Proof of Stake

As a variation of PoS, Delegated Proof of Stake involves users with tokens voting to delegate participants who create new blocks.

Pros

• Highly scalable, energy-efficient
• Cost-effective

Cons

• Partially centralized

Proof of Capacity

Proof of Capacity rents hard disk space on participant computers for decentralized block generation and verification.

Pros

• Combats absurd energy use by PoW protocols
• No need for dedicated hardware, and it uses any disks

Cons

• Not hugely adopted by crypto

Proof of Elapsed Time

Also known as Proof-of-History, the Proof of Elapsed Time consensus mechanism uses an independent operating random timer to assign each block for verification to miners. It's a hybrid of Proof of Work and Proof of Stake, and mining involves utilizing both consensus protocols.

Pros

• Little wait time
• Ultra-secure due to random block authentication

Cons

• No user can run multiple nodes

Proof of Burn

With Proof of Burn, the miners drive consensus by permanently eliminating or deleting specific coins from circulation, also called periodic burning. That's to prevent inflation of tokens while validating new transactions.

Pros

• Is sustainable since setbacks are short term to incentivize user loyalty

Cons

• The process favors whales with a large capital commitment

Conclusion

A consensus model is at the heart of any chain without central regulating authorities for these platforms where crypto and other assets run. The existence of consensus mechanisms is to maintain trust, security, integrity, and agreement on the decentralized Blockchain ecosystem.

Consensus mechanisms keep the Blockchain self-sustained as algorithms, helping gain necessary agreement among multi-agent or distributed ledger systems.

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