Five Unusual Consensus Algorithms
Consensus algorithms are not limited to Proof-of-Work and Proof-of-Stake. With the growing needs of the crypto community, the diversity of consensus algorithms is increasing every year.
According to the blockchain trilemma, it's practically impossible to create a cryptocurrency network that fully adheres to the three main principles – decentralization, security, and scalability. Due to this, no blockchain system can be considered perfect.
This is why blockchain projects are attempting to create their own consensus algorithms that can address the problems of the past. In this article, we'll take a look at 5 unique algorithms that power various blockchains and provide examples of specific cryptocurrencies that utilize them.
Proof of Space and Time (PoST)
This consensus algorithm was created to replace the Proof-of-Work (PoW) algorithm. It works by using proofs of space and time, which are based on storing data on hard disk drives (HDD). The main concept behind PoST is that instead of using a large amount of energy to generate new blocks, the network should use a large amount of hard drive space to prove its workability.
The block formation process in PoST consists of the following steps:
- First, a miner creates a new block that contains information about the previous one.
- Then, the miner must prove that they have enough hard drive space and are willing to spend a specific amount of time computing the proof of space and time function.
- Finally, the network verifies the proof to ensure that the miner has spent enough time and space generating the new block.
If the proof of space and time is correct, the network adds a new block to the chain and rewards the miner for their work.
Some of the cryptocurrencies that use Proof of Space and Time (PoST) include Chia (XCH), BitTorrent (BTT), Filecoin (FIL), Burstcoin (BURST), PlotX (PLOT), Hdd Coin (HDD), Flax (FLAX), Swarm (SWM), and Spacecoin (SPACE).
Directed Acyclic Graph (DAG)
A DAG is a data structure composed of nodes and edges between them. The graph is directed, meaning that the edges have a direction and cannot create cycles. DAG is used as an alternative to traditional blockchain to provide greater speed and scalability since each new transaction can be processed in parallel with other transactions that do not depend on it. Additionally, DAG provides high resistance to 51% attacks since an attacker would have to control more than 50% of the entire network to modify transaction history.
Cryptocurrencies that use DAG as their underlying algorithm include IOTA (MIOTA), NANO, Avalanche (AVAX), and Fantom (FTM).
Tendermint
Tendermint is a BFT-based (Byzantine Fault Tolerance) consensus algorithm that employs a signature mechanism and can be applied in private, global, and public blockchains.
Tendermint uses two levels of confirmation:
- The first level uses BFT to achieve consensus among those who sign transactions.
- The second level uses the Proof-of-Stake (PoS) algorithm to determine which block will continue the chain.
Some of the cryptocurrencies that use Tendermint include Cosmos (ATOM), Terra (LUNA), and Binance Coin (BNB).
If you're interested in learning more about the Tendermint algorithm, we have an article on the Gagarin News website.
Federated Byzantine Agreement (FBA)
This consensus algorithm enables decentralized networks to reach agreements, where each node can be connected to different networks or have different voting rights. In FBA, nodes form groups that reach a consensus by voting.
Transactions are confirmed by exchanging messages between nodes, rather than by solving complex mathematical puzzles, as is the case with PoW or PoS.
One example of using FBA is Stellar (XLM). Stellar is a cryptocurrency that provides a global payment protocol using FBA. In addition to Stellar, there are other cryptocurrencies that use FBA, including Ripple (XRP), Zilliqa (ZIL), and Algorand (ALGO).
Practical Byzantine Fault Tolerance (PBFT)
This algorithm was designed for use in distributed systems with a known number of participants. It allows for consensus to be reached even if up to one-third of the participants are not functioning or may be maliciously attempting to disrupt the process.
In PBFT, each node in the network acts as a client, sending requests to other nodes. Each request goes through a series of stages, is verified, and returned to the client node. If more than two-thirds of the nodes agree on the result, the transaction is considered confirmed.
Some cryptocurrencies that use PBFT include Hedera Hashgraph (HBAR), Hyperledger Fabric, and Quorum (QTUM).
