BLOCK CHAIN TECHNOLOGY

(Open Elective)

Dr. K. VENKATA RAMANA

Associate Professor
Dept. of Computer Science Engineering
ANDHRA UNIVERSITY

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Need of consensus:

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Need of consensus:

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Need of consensus:

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Need of consensus:
▪ A consensus algorithm is a procedure that allows each peer of the
blockchain network to set a shared agreement about the state of the
decentralized ledger.
▪ In other words, the consensus algorithm is a protocol using which all
the nodes in the blockchain network come to a common consensus
(agreement) on the current data state in the ledger and can trust
unknown peers in the network.
▪ A consensus mechanism enables the blockchain network to attain
reliability and build a level of trust between different nodes, while
ensuring security in the environment.
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Consensus Algorithms

1. Proof of Work (PoW)

2. Proof of Stake (PoS)
3. Proof of Burn (PoB)
4. Proof of Elapsed Time
5. Proof of Activity (PoA)
6. Proof of Capacity (PoC)

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Proof of Work (PoW)

• It is one of the oldest consensus algorithms introduced

by Cynthia Dwork and Moni Naor in 1993 and
reintroduced by Satoshi Nakamoto (founder of Bitcoin) in
2008.
• This consensus algorithm is used to select a miner for
the next block generation.
• The central idea behind this algorithm is to solve a
complex mathematical puzzle and easily give out a
solution.

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Proof of Work (PoW)
• This mathematical puzzle requires a lot of computational
power and thus, the node who solves the puzzle as soon
as possible gets to mine the next block.

Bitcoin, Ethereum, Dogecoin, Litecoin, Zcash, Horizon

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Proof of Stake (PoS)
• PoS consensus eliminates the high energy consumption by PoW. PoS
uses a staking mechanism in which miners (or validators) hold some of
their earned coins in the network to get selected for adding a block.

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Proof of Stake (PoS)

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Cont…

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Proof of Stake (PoS)

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Delegated Proof of Stake (DPoS)

• In Delegated Proof of Stake (DPoS) mechanism, the validators (Miners) or

delegates selection is based on voting. It’s an additional layer to PoS
protocol. It works similarly to the real-life election and voting system.

• DPoS was coined in 2014 by an American cryptocurrency entrepreneur and

software developer, Daniel Larimer.

• The DPoS maintains an election process where a selected number of

delegates (or validators or miner) are chosen. Those delegates are
responsible and trusted by the network participants for validating each new
block added to the network.

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Delegated Proof of Stake (DPoS)
• DPoS improves the PoS mechanism by introducing voting for delegates.
Here, network participants vote for the trusted delegates (or miners)
using their coins. Then, based on a random selection, one voted delegate
gets the chance to add its block.

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Delegated Proof of Stake (DPoS)

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Proof of Burn (PoB)
• In the Proof of Burn (PoB) algorithm, miners reach a
consensus by burning the coins.
• It’s a process in which crypto coins get permanently
eliminated from regular circulation.

• In such cases, the burning of coins mechanism is used to validate

transactions.
• Hence, the more coins a miner burns, the higher the chances of adding
the block to the network.
• There are various versions of Proof of Burn in blockchain, with the
most acknowledged version being Iain Stewart’s algorithm.
• He is also the inventor of the Proof of Burn consensus mechanism.

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Proof of Burn (PoB)

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Proof of Burn (PoB)

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Proof of Elapsed Time (PoET)
• PoET mechanism uses time-lottery-based concepts.
• It distributes random waiting times to each miner.
• For that waiting time the miner node sleeps, the first woken up
node (or short waiting time node) gets the chance to add its
block to the network.

• Afterward, the block verification takes place by network validators, and a

new block gets added.

• PoET is a consensus algorithm used in a permissioned blockchain

network to decide mining rights and next block miner.

• The PoET algorithm was developed by Intel Corporation, the processor chip
giant, in early 2016. Intel associated with Linux Foundation in the
development of Hyperledger Sawtooth. They aimed to build a highly
scalable private blockchain network.
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Proof of Elapsed Time (PoET)
• The concept basically motivates the idealogy of giving equal chances
of getting a reward like a lottery.

• PoET Mechanism assigns an amount of time to each node in the

network randomly. The node must sleep or do another task for that
random wait time. Whichever node gets the shortest waiting time
wakes up and add their block to the network. Later, the new update
information floods among other network participants.

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Proof of Elapsed Time (PoET)
This algorithm consists of two steps
❑ Selection process
❑ Generation Process
Selection Process
• First, each participating node has to share its certificate by Intel
Software Guard Extension (SGX), which ensures its validity to
generate a new block in the network. After that, they are eligible to
get a timer object.
• The numbers assigned to each node as a timer object (waiting
countdown time) by Intel’s random number generation instruction,
RAND. It generates difficult to detect random numbers.
• Now, the time object given to each participating node activates.

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Proof of Elapsed Time (PoET)

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Proof of Elapsed Time (PoET)
Generation Process
• After the time object ends and the node wakes up, it’s eligible to forge
a new block to the network.
• The active node generates the hash (using a hash function like SHA-
256) of its block of transactions and submits it for acceptance. It
doesn’t require showing computation work done by the node.
• Afterward, the update gets flooded to the network.

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Proof of Elapsed Time (PoET)

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Proof of Activity (PoA)
• Proof of Activity combines proof of work (PoW) and proof of Stake
(PoS) mechanism.

• First, PoA uses the mining concept by proof of work, where miners
have to do complex mathematical computations to prove their
efforts and sincerity to the network.

• However, instead of mining a block of transactions, PoA allows

miners to mine (or add) a blank template block with header
information and mining reward address.

• Once this almost empty block gets mined, the mechanism

switches to Proof of Stake (PoS).
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Proof of Activity (PoA)

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Proof of Activity (PoA)
Phase 2: Process of Signing the Block (by Validators)

• This phase uses the concepts of the Proof of Stake (PoS) mechanism for
using network validators.
• However, here validators and miners are separate entities.
• A group of network participants called validators (or signers) verifies the
block submitted by the miners.
• These network validators are selected based on their coins in the network.
• The higher the coins held by a validator, have the maximum chances of
getting their signed block chosen.
• Validators analyze the header information and miners’ reward address
of the block and then mark it as signed or unsigned.
• The process of signing continues until a block receives the required number
of signs on their block by the validators.

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Proof of Activity (PoA)
Phase 3: Adding transactions
• Once a block gets signed by the required number of validators. It marks a
valid and complete block.
• Afterward, new transactions from the transaction pool add to the block.
• Finally, the block gets added to the blockchain network.
• The mining reward is distributed among the winning block’s miner and
the validators for their contribution to the network.
• Decred (D-Cred) is the best-known cryptocurrency that utilizes proof of
activity.

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Proof of Capacity (PoC)
Proof of Capacity (PoC), also known as proof of space, is a consensus
mechanism in the blockchain. Unlike Proof of Work (PoW) which uses
separate mining hardware for computing power, or Proof of stake (PoS),
which stakes miners’ coins. PoC allows network participants (nodes) to
use their available hard drives space for mining a new block and
validating transactions.

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