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Consensus Mechanism

The document discusses different consensus mechanisms used in blockchain networks: - Proof of Work (PoW) uses computational power to solve complex puzzles to validate transactions and mine new coins. It is energy intensive. - Proof of Stake (PoS) selects block validators based on the amount of cryptocurrency they hold and the duration of holding. It is more energy efficient than PoW as it does not require heavy mining. - PoS rewards forgers who validate new blocks with transaction fees instead of newly minted coins. Forgers need to stake some of their cryptocurrency to participate in validation.

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22 views11 pages

Consensus Mechanism

The document discusses different consensus mechanisms used in blockchain networks: - Proof of Work (PoW) uses computational power to solve complex puzzles to validate transactions and mine new coins. It is energy intensive. - Proof of Stake (PoS) selects block validators based on the amount of cryptocurrency they hold and the duration of holding. It is more energy efficient than PoW as it does not require heavy mining. - PoS rewards forgers who validate new blocks with transaction fees instead of newly minted coins. Forgers need to stake some of their cryptocurrency to participate in validation.

Uploaded by

aditnuri414
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Consensus Mechanism

• Reliable, robust, efficient and secure


consensus mechanism

• Create fairness and equality in the


Blockchain network

• Validate and verify the data being


appended to the Blockchain is valid
Types of Consensus Mechanism

Proof of Proof of
Work (POW) Stake (POS)
Proof of Work (POW)
1990s

Used by crypto projects


like Bitcoin & Ethereum

Uses computational power to solve


complex mathematical problems

Create new virtual coins


Proof of Work & mining in Bitcoin Blockchain

Mempool - Transactions Average time for solving


1 bundled in a memory pool the puzzle is 10 minutes 5

Mining – Verification of transaction Puzzle gets revised


2 done by participating nodes after every 14 days. 6

Asymmetric Puzzles - Difficult to The first person who solves the


3 solve but very easy to verify puzzle is rewarded with newly minted 7
Bitcoins & network transaction fees

More computational power - better


The verified transactions
4 chances to solve the puzzle
form a block 8
Challenges with Proof of Work

Wastage of computing power


& electricity
Proof of Stake (POS)

• Bock validator is selected by a


randomized system

• Block creator is decided by the:


• Amount of cryptocurrency with a user
• Duration of the holding
Proof of Stake (POS)

• Directly proportional to the user’s holding


of the cryptocurrency

• In POS, Blocks are forged/minted

• Block creators are known as forgers


Forgers need to keep some of
their money at stake
Forgers need to keep some of
their money at stake
Forgers need to keep some of
their money at stake
• In POS, cryptocurrency units are created
initially at the time of launch

• Block validators are rewarded with the


transaction fees for creating new blocks

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