Sometimes, changes or other aspects related to these two problems attract the Crypto community to discuss further. Because Blockchain technology is a component, there is a high probability that every development can cause professional Crypto assets away from digital assets that are not on the blockchain. Especially if it is related to transactions that will definitely be fatal if there is an error in it. Maybe on the concept consensus mechanism, or from delays confirming, and so on.
It’s still warm in memories, the way that the implementation to implement the Proof of Work consensus on Bitcoin blockchain has turned crypto enthusiasts disengaged from the most coveted cryptocurrency assets.
Basic Concept Consensus Mechanism
In short, this algorithm, known as consensus, is the algorithm utilized by blockchain and computers systems to reach an agreement on the addition of data in the system.
The ledger is open and accessible to everyone; however, it is very difficult to alter. Blockchain users are not able to alter the transactions included. However, they can add a new transaction block. The newly added block is only added when the consensus algorithm agrees to the inclusion of the new transaction.
So, Why is This Procedure Necessary in a System of Blockchain?
As we all know, there’s no one single authority to oversee the operations in the world of crypto. The mechanisms are created by a decentralized method until the decision-making or verification. Authentication, verification, and decision-making within the Blockchain have to include the entire population of users that are part of the system.
However, the fact that it involves hundreds of thousands or even millions of users requires a fair, efficient, and reliable system that ensures that everyone taking part in it has the right to have a “voice.” For this reason, it is necessary to master the concept of the consensus mechanism to understand what is Blockchain technology?
Additionally, this algorithm provides the sole source of Proof that the transactions executed by the user are authentic or fake. This prevents the users from recording their transactions in two places, also known as double-spending.
Types of Consensus Mechanism
There are various types of consensus mechanism that have their respective functions to perfect the concept that has been designed. These are some of which we will discuss below.
1. Proof of Work (PoW)
Consensus Proof of Work is the “father” of all types of consensus algorithms. This algorithm was first utilized on the Bitcoin blockchain and was later followed by many early-generation altcoins.
Within the Proof of Work concept, miners function as the transaction’s validators. They are able to add blocks to the Blockchain if they can solve difficult mathematical problems. If they succeed and are able to provide “proof of their hard work” (aka evidence of their work), They can include a new block into it.
Unfortunately, this type of algorithmic process creates huge costs. Every miner requires a reliable computer system to meet the demands of other miners mining cryptocurrency. In the meantime, they must spend a lot of money to purchase the equipment.
In addition to hardware as well, they also need to cover the cost of electricity. This is due to the process of solving puzzles can be very long.
2. Proof of Stake (PoS)
The other consensus-based algorithm that is used can be described as Proof of Stake (PoS). This algorithm is implemented by the newer coins like Cardano and Ethereum as it is later upgraded into Ethereum 2.0.
In the Proof of Stake system, validated parties do not have to buy hardware. In exchange, they are required to invest in cryptocurrency instead. Why is this?
Proof of Stake is a concept that a person can verify or mine the transactions of cryptocurrency based on the amount of coins they hold. This means, the greater the number of coins miners own thus the higher the bargaining power when mining crypto assets.
Contrary to Proof of work, which requires a sophisticated machine, the Proof of stake could be accomplished using a standard computer. However, it is essential to put your crypto in the form of a wallet. The coins could eventually be utilized to decide whether a transaction is worthy of being documented as a blockchain transaction or not.
When the deal is negotiated, and the validity is confirmed, the person who signed it will be paid a sum in the form of fees. But, if the validator attempts to behave in a manner that is not appropriate and uses the money to the stake, the money could be stolen.
The process is regarded as quicker and cheaper over PoW consensus. This makes ADA enjoy high trust from crypto investors.
3. Delegated Proof of Stake (DPOS)
DPOS (Delegate Proof of Stake) or Proof of stake which is delegated or has an electoral system for voting like it was discovered in the hands of a Blockchain developer known as Dan Larimer, founder of Blockchain Bitshares, Steem and Eos, Vexanium Based Blockchain makes use of the consensus (DPoS) to determine active Block producers who are legally authorized to validate the correctness of blocks within Blockchain. Blockchain network.
However, on the Vexanium Blockchain, the DPOS process is performed at Layer 2 and is only half the process involved in the Vexanium consensus. The remaining half is involved during the process validating each block until it’s final (irreversible) and was done using Asynchronous Byzantine Fault Tolerant (aBFT).
Of the various types of consensus discussed above, the next consensus algorithm is the one that makes the nature of the blockchain system adaptable. No one blockchain algorithm can be said to be the best or best value.
Every consensus comes with its benefits. This is the appeal that is the appeal of Blockchain technology. It’s different to go to an arrangement (deal) using an algorithmic system of mathematical computation.
According to header information, an assortment of participants who want to sign or verify blocks will be randomly chosen. A validator who holds an increasing number of coins will be selected as a signer.
When all validators have confirmed the new block, the status of the Blockchain is different from the block that was discovered to the complete block. The block is then analyzed as part of the Blockchain. Validators and miners who participate in the block earn mining rewards, separate for miners and validators.