Consensus Algorithms
Last updated
Was this helpful?
Last updated
Was this helpful?
Coordination in a distributed environment can be achieved through the use of a consensus algorithm. It must ensure that even if some agents fail, the system as a whole can agree on a single source of truth. As a result of this, the system must have the ability to withstand failures.
One person or group has complete control over the system in a centralized arrangement. Most of the time, they are free to make adjustments as they see fit because there is no formal governance structure in place that requires approval among a large number of administrators.
In a decentralized system, though, things are quite different. In the case of a distributed database, how can we come to an agreement on which records should be added?
By overcoming this obstacle in a world where people do not trust one another, blockchains were set on their current course for widespread adoption. For the proper operation of cryptocurrencies and distributed ledgers, we'll examine the importance of consensus algorithms.
To keep track of their holdings, users have to rely on the , which acts as a decentralized ledger. That everyone (or, more precisely, every node) has access to the database is absolutely critical. Otherwise, the bitcoin network's fundamental purpose would be undermined by contradicting facts.
Because of the nature of, users are unable to spend one other's coins. However, network participants must still rely on a single source of truth to establish whether funds have already been spent.
As a way of coordinating participants, creator Satoshi Nakamoto proposed the method. In the meanwhile, we'll look at some of the common characteristics of the many consensus algorithms in use.
In order to add a (we'll call it a validator), a user must first submit a stake. Validators are required to put a value on the line, which deters them from behaving unethically. They will lose their stake if they cheat. Computing power, cryptocurrencies, and even a person's good name are all examples.
Why would they put their own money and time at risk? There's also a reward up for grabs. In most cases, this is built up of fees paid by other users, new bitcoin units, or a combination of the two.
Transparency is the furthest thing from our minds. We must be able to recognize plagiarism. As a general rule, it should be expensive for them to manufacture the blocks, but inexpensive for anyone to verify them. Regular users can keep an eye on the validators as a result of this.