Unveiling the Secrets of Consensus Algorithms: The Backbone of Blockchain Technology
A programmed procedure
Consensus is key to decentralized participation in the Distributed Ledger environment. The participants should arrive at a consensus about what is good and should be included and what is bad and should be excluded. The entire community needs to function in an orderly fashion and realize the purpose of the collaboration.
Without consensus — there will be chaos. Chaos would be detrimental to the sustainability of the system.
In the Blockchain ecosystem, a consensus algorithm is a defined programmed procedure. It is a set of rules which defines how the peer participants of the peer-to-peer network conduct themselves in the network environment. These rules will help the participants decide which of the transactions are to be accepted to be included in the immutable digital ledger and which ones are not to be.
Why is a consensus algorithm needed?
The peers in the network will never know each other. The problem, therefore, is how to establish trust among the participants without disclosing their identities.
To achieve that, the activities allowed to one needs to be restricted and strictly defined. So, once you know that the other participants cannot misbehave, you can participate in the network with trust and together can achieve reliability. This will help larger participation and will in turn lend security to the entire process.
The consensus algorithm has five objectives in the DLT environment. The first of those objectives is that it wants to achieve UNIFIED AGREEMENT among participants. In centralized systems, Trusting the central authority is mandatory.
Here, the participants need to trust the system. And they need to do this without having to establish trust among each other.
Only then this environment can achieve UNIFIED AGREEMENT. Secondly, the network participants should be motivated to achieve COMMON ALIGNMENT OF ALL THEIR ECONOMIC INCENTIVES. This is a must to develop a self-regulating system that can be entrusted.
Third — the system should not allow anyone to cheat — it should PREVENT DOUBLE SPENDING. Fourth — the system should be FAULT TOLERANT — so much so that — if a section of the network fails to perform at any point in time, the rest of the network should be able to continue business seamlessly and keep providing Consistent and Reliable results.
Last but not least the consensus algorithm should be able to ensure EQUALITY among all participants so that no one can take any unfair advantage from the system.
So, we can say — a good consensus algorithm should have these properties:
IT SHOULD BE SAFE: capable of generating valid results and does not entertain false / malafide attempts
IT SHOULD BE INCLUSIVE: it should be able to accommodate the viewpoints of all participants and move with the majority of them
IT SHOULD BE PARTICIPATORY: without any discrimination towards any participant and should allow and incentivize participation
IT SHOULD BE EGALITARIAN: it should treat every participant as an equal member of the whole community
A faulty consensus algorithm will split the decision of the community and may even result in the duplication of records (known as forking) creating conflicting transaction history and failing to perform as a single source of truth. This results from the failure of the community to arrive at a consensus.
Subsequently, this will make some nodes/ participants confused about the right course of action and result in malfunction.
A section of the community could get conflicted and will increase the latency in inter-nodal communication, dispute resolution — increasing the application latency and reducing the network efficiency. In other terms — it will make the objectives of the blockchain project fail.
Decoding Consensus Algorithms: The Pillars of Trust in a Decentralized World
Consensus Algorithms are commonly termed as ‘Proof-of-Something’ — the most popular one is the first one used by Bitcoin blockchain — ‘Proof-of-Work’. Others are Proof-of-Stake, Proof-of-Authority, Proof-of-History, Proof-of-Activity, Proof-of-Identity, Proof-of-Burn, Proof-of-Elapsed Time, Proof-of-Importance and many such.
Some are also known differently as Delegated Proof-of-Stake, Leased Proof-of¬Stake. Some have uncommon names like Byzantine Fault Tolerance, Direct Acrylic Graph, Tendermint, Ouroboros and some even call themselves GRANDPA!!!
Grandpa may sound funny — but its actually an acronym for GHOST-based Recursive ANcestor Deriving Prefix Agreement (GHOST is an acronym for a mathematical function — nothing Ethereal)
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