Blockchain technology 4. – Cryptographic keys

Blockchain networks require consensus mechanisms to ensure all participants come to a consensus about the truthfulness of transactions. This paper discusses several consensus algorithms by exploring how they function and the roles they play in securing a reliable blockchain.

The consensus mechanisms include: Proof of Work The first Bitcoin and many subsequent cryptocurrencies used the PoW mechanism. Under this method, miners must find an answer to the “math problem” enigmatic enough to validate the transaction and add the new block to the chain. PoW is secure but guilty of using too much energy: Proof of Stake Unlike PoW, the PoS mechanism allows validators to achieve the right to process or verify transactions using the amount of coins they possess and are willing to “stake.” Pictures are chosen to create new blocks and verify transactions at a chance rate that is directly linked to the amount staked.

Cryptocurrency like Ethereum 2.0 and Cardano is PoS: Delegated Proof of Stake DPoS is a method that allows the select few validators to verify transactions and manage the blockchain by voting the coin holders. The system is more scalable than PoW and PoS, meaning faster transaction processing. A good example of DPoS blockchain includes EOS and Tron: Proof of Authority PoA uses a tiny number of “trusted” verifiers who are empowered to validate transactions and create new blocks.

The PoA is simple and brutally efficient, making it the best fit for private or consortium blockchains where the validators are known. VeChain utilizes the PoA mechanism: Other examples of consensus algorithms are Proof of Burn, where a participant must destroy a particular amount of cryptocurrency to earn the right to mine or validate transactions; Proof of Capacity, where available hard disk space determines who gets the right to mine; and PoET, which employs a special processor environment to ensure equality of opportunity in mining processes that is common among permissioned blockchains.

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