By Admin December 9, 2022 4 minute read
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Posts » Proof of What? 5 Key Crypto Algorithms
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Table of Contents
· Proof-of-Elapsed-Time (PoET)
Blockchain is a decentralized network that
ensures transparency, security, privacy, immutability, etc. Since it is
decentralized, no one has central authority to validate, verify and back up the
transactions, but still, every transaction is verified and secured under
Blockchain technology. This is only possible due to the presence of the consensus
algorithm.
Consensus Algorithm plays a vital role in
Blockchain technology. It establishes trust between the Blockchain network and
the computing environment. The protocol ensures that all the Blockchain nodes
agree upon blocks that are added to the Blockchain.
Several proofs ensure that Blockchain can be
trusted and verified. Let’s learn about some Proofs in the following sections.
Proof-of-Burn
(PoB)
Proof-of-Burn (PoB) is an alternative consensus
algorithm that addresses the issue of high energy consumption in a
Proof-of-Work (PoW) System. Validators with PoB send coins to an address where
they are irretrievable instead of investing in expensive hardware. In addition
to ensuring that the network remains active and agile, this process consumes
few resources (except for the burned coins). Miners use a verifiably
un-spendable address to burn the coins.
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Miners can burn a native or alternative
currency, such as bitcoin, depending on the implementation. Tokens of the
Blockchain’s native currency are rewarded in exchange. As a result, they gain
the right to write blocks proportionately to the number of coins they have
burned.
As new blocks are mined, burnt coins lose some
power or decay. To stay competitive, miners may need to purchase new equipment
every few years as technology advances. For that competitive edge, miners may
also need to invest in better technology as new techniques are developed
periodically.
Proof-of-Elapsed-Time
(PoET)
One of the most ethical consensus algorithms is
PoET, which only uses ethical criteria to determine the next block. In
permissioned Blockchain networks, it is commonly used. Every validator present
on the network has an equal opportunity to create their block using this
process. To do this, each node adds proof of their wait to the block after
waiting for a different time. The produced blocks are then sent out to the
network for review by other users. The validator with the lowest timer value in
the proof portion wins. The winning validator node’s block is added to the
Blockchain. Additional safeguards in the algorithm prevent nodes from
consistently winning the election or producing the lowest timer value.
Proof-of-Stake (PoS)
This method is an alternative to PoW. Several
Blockchain networks have shifted to PoS Consensus Algorithm. In this type of
consensus algorithm, validators instead invest in the coins of the system by
locking up some of their coins as stakes.
The more blocks a validator adds to the
Blockchain, the more rewards they receive. This is because they get a more
significant share of the reward proportionate to their stake in the network,
and their stake increases accordingly. As a result, PoS encourages validators
to reach an agreement by providing an incentive mechanism.
Proof-of-Identity
(PoI)
Proof of Identity is a user’s private key
compared to an authorized identity. Proof-of-Identity is a chunk of
cryptographic evidence linking a user’s private key to a particular
transaction.
A Blockchain network allows any authenticated
user to generate a block of data that may be shown to others on the network.
Proof-of-Identity guarantees data integrity and authenticity. Smart cities can
also employ Proof of Identity, a Blockchain consensus technique, to confirm the
citizenship of their residents.
Proof-of-Activity
(PoA)
Proof-of-Activity (PoA) combines Proof-of-Work
(PoW) and Proof-of-Stake (PoS), two consensus mechanisms that have been around
for years but are now gaining popularity. Both consensus mechanisms, the PoW
and PoS, can prevent around half of all malicious cyberattacks.
Proof-of-Activity uses a mining concept, but
instead of mining blocks of transactions, it allows miners to mine (or add)
empty blocks with header information to reward them. Once this almost blank
block is mined, the mechanism switches to Proof-of-Stake (PoS).
In Proof-of-Authority, nodes that become
validators are the ones that are allowed to create new blocks. These validators
are incentivized to secure and preserve the Blockchain network by securing
their own identities.
Bottom Line
The consensus algorithms mentioned above are
some of the major reasons why Blockchain is sustaining currently. Without this
credibility, Blockchain wouldn’t be what it is today. There are also other
types of consensus algorithms like Proof-of-Capacity (PoC), Proof-of-Stake-Authority (PoSA),
Delegated Proof-of-Stake (DPoS), etc.
Blockchain networks require a consensus
algorithm to verify every transaction that is being committed so that no fraud
occurs. Thus, it can be concluded that the consensus algorithm makes Blockchain
a powerhouse for every industry.