Consensus refers to the agreement of nodes in a blockchain network on the order and content of a block. The nodes in the blockchain network verify the validity of a transaction by consensus.
In centralized systems, the decision for the operations performed is made by a single authority. In decentralized systems, on the other hand, transactions are carried out by nodes with the same level of authority on the network by making joint decisions and forming a consensus.
The consensus mechanism is used to build agreement and trust in a decentralized network of systems. In the cryptocurrency world, consensus uses consensus mechanisms such as Proof of Work and Proof of Stake. Proof of Work and Proof of Stake are designed to solve the trust problem of nodes on the blockchain network.
How Does Consensus Work?
Consensus works as a mechanism for global systems that are decentralized and not dependent on a single authority. Regulations within the system are carried out by the joint decisions of the nodes in the distributed structure within the network. Consensus among nodes is needed to verify, validate and block mine transactions in the blockchain network.
The data of transactions carried out within the blockchain network is contained in a ledger that is made publicly available. The nodes in the network are expected to reach a consensus about the ledgers. In order to achieve consensus within the nodes, a fair, simultaneous, functional and secure mechanism is needed.
What Are the Types of Consensus Mechanisms?
The consensus mechanisms are divided into various types:
- Proof of Work - PoW
- Proof of Stake - PoS
- Proof of Capacity - PoC
- Proof of Authority - PoA
- Proof of Burn - PoB
Proof of Work
Proof of work is one of the consensus mechanisms commonly used by popular cryptocurrency networks. The nodes in the network are responsible for maintaining the continuity of the network. Mining operations on the network deal with blocks that are to be added to the blockchain. For a new block to be added to the blockchain, complex problems need to be solved. Due to the difficulty of solving complex problems, consensus mechanisms are needed. Proof of work mechanism helps in solving complex problems. It requires the node of the network to prove that it has the right to add new transactions to the blockchain. Proof of work requires high energy consumption and long processing time when performing mining operations.
Proof of Work is a consensus mechanism used by many cryptocurrencies. A network participant needs to prove their work in order to add new transactions to the blockchain network through the node they operate.
Proof of Stake
Proof of stake involves the realization of the node's responsibility to hold cryptocurrency in the public ledger. Proof of stake is the consensus mechanism used in cryptocurrency mining to verify transactions and mine a new token. Cost and energy consumption are lower while using this mechanism.
In the Proof of Stake mechanism, participants need to stake (lock) their cryptocurrency assets to verify transactions and receive rewards. The amount of cryptocurrency used for staking is locked for a predetermined period and is represented as a user's stake on the network. In the Proof of Stake protocol, the amount of owned cryptocurrency, in other words; capital, is emphasized instead of computational power, and this increases the power level on the network.
Proof of Capacity
Proof of capacity is a consensus mechanism that enables the use of available hard disk space to make decisions and verify transactions for mining operations performed on the blockchain network.
PoC enables the use of free space on hard disks to perform cryptocurrency mining. Before the mining process, possible solution lists are stored on the drive. Depending on the amount of drive space that miners have, the amount of matching required for necessary hash values varies, and this increases the rate of winning the mining reward. Before mining, miners need to make free space to host the solution list, and this process is called "plotting".
Proof of Authority
Proof of authority is the consensus mechanism used to generate a new block and provides computational power to the network. It allows transactions to be executed faster.
Proof of Authority is a consensus mechanism that relies on reputable validators to create blocks and thereby provides computing power to the network. It enables faster transactions with Byzantine Fault Tolerance (BFT). PoA is a protocol created to achieve consensus in blockchains. PoA was introduced by Gavin Wood, one of Ethereum's co-founders.
In the Proof of Authority mechanism, users do not need crypto assets or staking methods to verify a transaction; instead, they use their reputation and identity. For individuals to have the right to verify, their identity information must be verified.
Proof of Burn
Proof of burn is a consensus mechanism by burning assets in inaccessible cryptocurrency wallets so that they cease to exist. It is a mechanism that allows miners to add blocks by sending their cryptocurrency to an inaccessible account. Proof of burn permanently removes burned cryptocurrency from transactions.
The Proof of Burn protocol aims to minimize energy usage. PoB allows miners to burn cryptocurrencies. Miners earn the right to create a new block with the burned cryptocurrency, and the right to create a block varies depending on the amount of cryptocurrency burned.
What Is Distributed Consensus?
Distributed consensus is the mechanism used to decentralize the network and make it work. Distributed consensus is primarily based on the store of value offered by the bidder. Distributed consensus includes a reward system for the cryptocurrency owned by the blockchain network. Distributed consensus is based on transparency.
The large number of nodes in the network makes it difficult to form a consensus within that network. In order to establish consensus within the network, the accuracy of the data obtained by the nodes of the network must be certain. If the correct data is not obtained by consensus in the network, the nodes are considered to have failed. All nodes of the network must have a copy of the ledger and the nodes must be sure of the accuracy of the ledger. The accuracy of the ledgers in the network is established by distributed consensus.
Why Is Consensus Important?
Consensus prevents malicious users from cheating on a cryptocurrency platform. Double-spending is an example of cheating on a cryptocurrency platform. Double spending refers to using a cryptocurrency twice at the same time. Double spending is when the same cryptocurrency is promised to be sent to two blocks, but is only sent to one block.
Consensus mechanisms make it high-priced and difficult to propose new blocks of verified transactions and discourage malicious users from doing so. Consensus mechanisms incentivize nodes to propose new blocks with rewards.
What Is Proof of Meta (PoM)?
Metatime has adopted an ecosystem culture that advocates that mining should be a focal point beyond providing servers to participants in the blockchain network. Metatime recognized that mining operations require technical know-how to execute and are under-resourced to drive the future of blockchain technologies and meet the aspirations of end-participants. For this reason, Metatime has developed a hybrid mining system specific to MetaChain.
Proof of Meta, a proprietary hybrid mining system, allows participants to directly contribute to and drive the ecosystem in the technical and social sphere, rather than systems that are directly integrated with the network. With Metatime, the mining system offers three options with consensus mechanisms that contribute to the ecosystem in their own right.
MetaMiner: It works with the MPoS (Meta Proof of Stake) consensus mechanism. MetaMinner performs the tasks of verifying, logging and signing block transactions in the network.
MacroMiner: It works with the MPoH (Meta Proof of History) consensus mechanism. MacroMiners are miners who contribute to the decentralized and distributed structure of MetaChain, verifying and backing up the network and providing the necessary hardware needs for applications in the ecosystem.
MicroMiner: It works with the MPoSW (Meta Proof of Social Work) consensus mechanism. MicroMiner enables the establishment of relationships between applications and users within the ecosystem by confirming the transfer transactions performed within the network.
