What is Distributed Consensus?
Distributed consensus is a method used by decentralized systems, such as blockchain networks, to reach agreement on a single version of the truth in a decentralized manner. In a decentralized system, there is no central authority that can make decisions or enforce rules, so consensus is achieved through collaboration between nodes in the network.
The main goal of distributed consensus is to ensure that all nodes in the network have the same view of the data, even in the presence of faults, such as node failures or malicious actors. This is crucial for ensuring the integrity and security of the system, as well as its ability to function effectively.
There are several different algorithms and protocols used to achieve distributed consensus, including proof-of-work (PoW), proof-of-stake (PoS), and delegated proof-of-stake (DPoS). These algorithms use different methods to reach agreement on the state of the network, such as solving complex mathematical problems, validating transactions based on the number of coins held by a node, or electing delegates to represent the network and make decisions.
Proof-of-Work (PoW) is a consensus algorithm used by cryptocurrencies such as Bitcoin. In PoW, nodes compete to solve a complex mathematical problem, and the node that solves the problem first is allowed to add a new block to the blockchain. This process is known as mining, and it requires a large amount of computational power and energy.
Proof-of-Stake (PoS) is a consensus algorithm used by cryptocurrencies such as Ethereum. In PoS, nodes validate transactions based on the number of coins they hold, and the probability of a node being selected to validate a transaction is proportional to the number of coins it holds. This means that the more coins a node holds, the more likely it is to be selected to validate a transaction.
Delegated Proof-of-Stake (DPoS) is a consensus algorithm used by cryptocurrencies such as EOS. In DPoS, nodes vote for delegates to represent the network and make decisions, and the delegates are selected based on the number of votes they receive. The delegates then validate transactions and add new blocks to the blockchain.
Simplified Example
Imagine you and your friends are playing a game, and you all need to agree on the rules before you start playing. One person says, "I think we should play by these rules," and then everyone else says if they agree or not. If most of the people agree, then the rules are set and everyone knows what to do. This is like a distributed consensus, where many people come together to agree on something. In the digital world, a distributed consensus is when many computers work together to agree on something, like making sure all the transactions on a blockchain network are valid and secure. Just like in the game, everyone needs to agree so that everyone is on the same page and the game (or network) can work properly.
History of the Term Distributed Consensus
The term "Distributed Consensus" found prominence in the realm of computer science and blockchain technology, referring to a fundamental principle that underpins decentralized networks. It became increasingly relevant with the emergence of blockchain systems. Its theoretical roots can be traced back to the 1980s when academic discussions about fault-tolerant distributed systems began. However, the practical application within blockchain networks took shape in the early 2000s with the rise of cryptocurrencies like Bitcoin. Satoshi Nakamoto's Bitcoin whitepaper in 2008 introduced the concept of consensus mechanisms, leveraging cryptographic techniques to enable agreement among multiple nodes without a central authority, thus formalizing the idea of distributed consensus. This concept laid the groundwork for various consensus algorithms in blockchain networks, enabling trust and agreement among distributed participants without reliance on a central authority.
Examples
Proof of Work (PoW): Proof of Work (PoW) is a type of distributed consensus algorithm that requires nodes to perform a computationally intensive task, such as solving a cryptographic puzzle, in order to validate transactions and add them to the blockchain. The first node to solve the puzzle is rewarded with a block reward, and it is then broadcast to the network for verification. If a majority of nodes agree that the solution is valid, the transaction is added to the blockchain. PoW is used by cryptocurrencies like Bitcoin, Ethereum, and Litecoin.
Proof of Stake (PoS): Proof of Stake (PoS) is a type of distributed consensus algorithm that requires nodes to hold a certain amount of cryptocurrency, called a stake, in order to validate transactions and add them to the blockchain. The validator nodes are randomly selected to validate transactions and add them to the blockchain, and they are incentivized to act honestly by the potential for rewards and penalties. PoS is used by cryptocurrencies like EOS, TRON, and Cardano.
Delegated Proof of Stake (DPoS): Delegated Proof of Stake (DPoS) is a type of distributed consensus algorithm that combines the concepts of PoS and voting. In this system, nodes vote for a small group of delegates, who are responsible for validating transactions and adding them to the blockchain. The delegates are incentivized to act honestly by the potential for rewards and penalties, and the system is designed to be more efficient and scalable than traditional PoS or PoW systems. DPoS is used by cryptocurrencies like Steem, BitShares, and EOS.
Related terms
Consensus: In the world of cryptocurrency, the meaning of consensus refers to the process by which all participants in a network agree on the current state of the system.
Distributed Network: A distributed network in cryptocurrency refers to a decentralized system where the data, transactions, and processing power are spread across many nodes in a network, rather than being concentrated in a central location.