Role of consensus algorithms in blockchain networks from "summary" of The Basics of Bitcoins and Blockchains by Antony Lewis
Consensus algorithms play a crucial role in blockchain networks. They enable a distributed network of nodes to agree on the current state of the blockchain without the need for a central authority. In other words, they ensure that all participants in the network are on the same page regarding the validity of transactions and the order in which they are added to the blockchain. There are various types of consensus algorithms, each with its own set of rules and mechanisms for achieving agreement among network participants. One of the most well-known consensus algorithms is Proof of Work (PoW), which is used by Bitcoin. PoW requires participants, known as miners, to solve complex mathematical puzzles to validate transactions and add new blocks to the blockchain. The first miner to solve the puzzle is rewarded with newly minted bitcoins. Another popular consensus algorithm is Proof of Stake (PoS), which selects block validators based on the number of coins they hold. Validators are chosen to create new blocks and secure the network based on their stake in the cryptocurrency. PoS is considered to be more energy-efficient than PoW since it does not require miners to compete in solving computationally intensive puzzles. Other consensus algorithms, such as Delegated Proof of Stake (DPoS) and Practical Byzantine Fault Tolerance (PBFT), have been developed to address the scalability and security issues associated with PoW and PoS. DPoS relies on a small number of elected delegates to validate transactions, while PBFT enables a network to reach consensus even in the presence of faulty nodes.- Consensus algorithms are essential for maintaining the integrity and security of blockchain networks. By ensuring that all participants agree on the state of the blockchain, these algorithms enable decentralized and trustless systems to function effectively. As blockchain technology continues to evolve, new consensus algorithms are likely to be developed to address the challenges of scalability, security, and energy consumption.
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