Different Types of Blockchain Consensus Mechanism - CoinGyan

Hi, guys, I hope you enjoyed part 1 of this post that was intended to enlighten you about the various cryptocurrency mechanism available in the cryptomarket. Now time to continue where I left off.

Let the games begin.

Proof of Activity

Decred Logo-Coingyan

Proof of Activity (POA) was introduced into the market in 2012 as a substitute for Proof of Stake. It is a mechanism that compliments Proof of Work and aids in the prevention of the dreaded 51% Attack, i.e. when an individual member or pool controls 51% or more of a network’s mining hash rate for their ulterior motives. Proof of Activity selects a random peer from the system to sign, create, build, forge ( whatever else it is that you want to call it ) a new block onto the blockchain.

However, this method needs an ongoing exchange of data on its blockchain and for reducing traffic, the block “template” is not inclusive of the transaction list and is preferably added by the last signer.

For preventing hyperinflation (stuff that happens when people buy too much of a currency causing a spike in price varying in degrees), there will be only 21m bitcoins that will be forged on bitcoins platform. So this means that when these 21 million BTC will be mined, the mining rewards for bitcoin will come to a close and bitcoin miners from here onwards will only receive transaction fees for doing a good job instead of an amalgamation of mining rewards and a part of the transaction fees.

Many people are of the assumption that this might cause security issues stemming out as a result of the so-called ‘tragedy of the commons’, where people act for fulfilling their ulterior motives and spoil the system. Thus, proof of activity was established as another form of motivation for bitcoin miners. Proof of activity is a hybrid method that acts as an amalgamation of proof of work and proof of stake working together for achieving consensus.

In proof of activity, mining buzzes off in a conventional proof-of-work style, with miners dashing to become the first person to solve the given cryptographic puzzle so that they can win both the reward and the opportunity for adding a new block on to the blockchain. Reliant on the implementation, blocks mined do not comprise of any transactions (they are more identical to templates); thus the winning block will only encompass a header along with the reward address of the triumphant miner.

At this point, the structure shifts to proof of stake. Now by using the data in the header, a random set of validators is selected to sign the current block. The greater the number of coins a validator possesses in the system, further prone he or she is to be selected for forging the next block. Thus the template becomes a full-fledged block as quickly as all the validators as a whole sign it.

If a couple of the chosen validators are not free for the completion of the current block, then the next victorious block is elected, a fresh batch of validators is picked up until a block achieves the right sum of signatures it needs to forge the block at hand successfully. The fees are then divided amongst the miner and the validators who their signatures on the block.

Criticisms of proof of activity approach are identical to both proof of work (too much energy is consumed for mining blocks) and proof of stake (there is nothing to deter a validator from double signing).

Decred seems to be the only coin as of now that is utilizing a variation of proof of activity.

Proof of Burn (PoB)


Proof of Burn is precisely what it is christened for i.e. you are offering proof that you have indeed charred a couple of your coins in the procedure of sending a transaction towards an address which is unspendable. This technique only works for coins mined with the Proof of Work cryptocurrency consensus mechanism. Existing members will try to burn the highest possible amount of coins so that they can “hopefully” be the one that gets the block reward. Most times Proof of Burn has been introduced to seed other coins by destroying the value of one.

With proof of burn, rather than spending tons and tons of money into costly computer gear, you ‘burn’ coins by transferring them to an address where they are irrevocable. By pledging your coins to the land of no return, you entitle yourself to a lifetime license so that you are able to mine on the network centered on a random selection procedure.

Contingent to the execution of the proof of burn mechanism, miners might burn the aboriginal currency or the currency of another chain like bitcoin. Therefore, the greater the number of coins you burn, the higher is the probability of you being elected for mining the next block.

After some time, your stakehold in the system deteriorates, so ultimately, you are most likely to burn more coins for increasing your chance of being chosen in the lottery. ( This imitates bitcoin’s mining procedure, where you’re required to invest persistently in the latest computing gear for maintaining hash rate.)

While proof of burn is a fantastic substitute to proof of work, the protocol still isn’t efficient in its utilization of resources. Another argument is that mining power goes merely to those individuals that are willing to burn through piles and piles of money and this leaves the small players stranded. Their (small players) dialogue is that this is “Not fair we want a slightly larger piece of the pie too.”

The only coin that leverages the proof of burn is slimcoin, a cryptocurrency that is built on peercoin. It makes use of a combination of proof of work, proof of stake and proof of burn, but is currently only semi-active.

Proof of Capacity (PoC)


Cryptocurrencies that make use of Proof of Capacity, aka Proof of Space, utilize Hard Drive Mining for validating fresh blocks on its platform. BurstCoin has been the very first one to come up with this concept. The more space that you have, the more likely you are to mine a block. Proof of Work miners burn supplies whereas Proof of Capacity permits anyone to make use of designated space on your individual hard drive for mining the respective cryptocurrency. An algorithm is usually employed to create chunks of information called plots by frequently hashing public keys. The greater space that you possess, the more likely you are to cash in on an opportunity of mining a block.

As we’ve seen, many of these alternative protocols utilize some form of pay-to-play scheme or rather ploy. Proof of capacity by no means appears to be distinctive, and the only difference is that over here you have to pay with the space you have on your hard drive. The greater the hard drive space you possess, the higher are the odds stacked in your favor of mining the following block and receiving the reward for forging, mining the current block. Before mining commences in a proof-of-capacity consensus mechanism, the algorithm spawns large data sets known as ‘plots,’ that you’re supposed to save within your hard drive. The higher the plots you possess, the better your chances of being able to find the next block in the chain.

Therefore, by investing in terabytes of hard drive space, you afford yourself an excellent chance of creating duplicate blocks and ultimately forking the system. But with proof of capacity, we still have the issue of nothing at stake for deterring the bad actors.

Variations of this approach include proof of storage and proof of space. Burstcoin is the only cryptocurrency that uses a form of proof of capacity.


Byzantine Fault Tolerant (BFT)

Byzantine fault tolerance (BFT) is the resistance of a fault-tolerant computer system, mainly distributed computing systems, towards electronic component failures where there is imperfect information on whether a component is failed. In a “Byzantine failure,” an element such as a server can inconsistently appear both failed and functioned to failure-detection systems, presenting different symptoms to different observers. Bitcoin practices this approach. It is difficult for the other ingredients to declare it failed and shut it out of the network because they need to first reach a consensus regarding which regarding which part has failed in the first place. The term has been derived from the Byzantine Generals’ Problem, where actors must agree on a concerted strategy to avoid catastrophic system failure, but some of the actors are unreliable. Byzantine fault tolerance has also been referred to with the phrases interactive consistency or source congruency, error avalanche, Byzantine agreement problem, Byzantine generals problem, and Byzantine failure.

Practical Byzantine Fault Tolerance (PBFT)

Practical Byzantine Fault Tolerance (PBFT) algorithm provides a solution to the Byzantine Generals Problem that works in asynchronous environments like the Internet. PBFT involves a three-phase protocol and the conception of a primary (leader) node which acts as the block miner. The leader can be changed by the voting mechanism by the rest of the network if it exhibits irresponsible behavior. PBFT operates on the assumption that less than one-third of the nodes are faulty (f ), which say that it requires at least 3f +1 nodes.

Ziliqa and hyper ledger are two platforms that implement this mechanism.


Alright, that is the end of this post. Until then apart from all your super duper important work, it would mean the world to me if you could follow us on Facebook, Twitter, Instagram, Youtube. Bye for now guys and have a beautiful day.

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I am a tech enthusiast & Digital nomad from Dhenkanal, India I've been dealing with Bitcoin since 2014.I started CoinGyan to help users around the globe to learn about popular Cryptocurrencies. Here at CoinGyan, I write about Bitcoin Wallet, Cryptocurrency wallets, & making money from Crypto.

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