The consensus mechanism is a critical blockchain component, providing a non-partisan means of establishing agreement as to the network’s current state. But ever since Bitcoin emerged in 2008, its original consensus mechanism – Proof of Work (PoW) – has been emulated and iterated, paving the way for a series of alternative algorithms with their own unique characteristics.
From Proof of Work to Proof of Everything
Given Bitcoin’s success, it’s no surprise that its protocol should have attracted imitators, some of whom have sought to refine it, and others to overhaul it entirely. Nevertheless, it’s ironic that there is a lack of, well, consensus when it comes to consensus mechanisms. Which option constitutes the most stable and efficient solution? It depends on who you ask. To understand the major differences between some of the main algorithms, let’s take a closer look at them in turn.
Proof of Work was the original consensus mechanism used by Bitcoin and latterly implemented on the likes of Ethereum, Litecoin, and Dogecoin. PoW involves performing thousands of calculations per second to find the solution to a mathematical problem that is hard to solve but easy to verify. The Proof of Work system incentivizes miners by rewarding them with coins for each new block found.
Although it remains an extremely fair and secure consensus mechanism, PoW has been criticized over the years. Much has been made, for its example, of its high energy and resource requirements: the computational power needed for miners to solve complex mathematical puzzles ahead of their peers is huge. Critics lose sight of the fact that this is a feature and not a bug: the difficulty of cheating Proof of Work is what makes it so robust, and why the Bitcoin network is so valuable. Even the most well funded adversary would struggle to obtain the hashpower necessary to control the network…