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When it comes to blockchain tech, one of the most crucial parts is their consensus mechanism. Using the algorithm, blockchain very much ensures its operations, security, transaction speed, etc. With the evolution of blockchain technology, these mechanisms have evolved altogether. Bitcoin (BTC) is seen as the first practical use of blockchain tech, and it uses Proof-of-work mechanism to reach a consensus.
However, with further development, many new mechanisms were created including Proof-of-Stakes (PoS), Proof-of-Time (PoT), Proof-of-Activity (PoAct), Practical Byzantine Fault Tolerance (PBFT), and several others. All these consensus shows similarities towards their end goal yet slightly differs in their working. Many prominent and upcoming blockchain projects choose PoS and PoT, given their features and capabilities.
In Proof-of-Stakes (PoS) consensus mechanism, users can stake their relative tokens. These staked tokens are treated as collateral and locked within a smart contract. Unlike PoW, in PoS, the validator node or miner gets chosen and the selected validator handles the transactions in a block. While processing the transaction, the validator ensures there should be no defective or faulty information feeded while bringing transactions into the block.
The validator further needs to put up the finished up block to get added to the blockchain. However, other validators ensure the information and data feeded into the block is correct. It could go both ways, either profiting the validator or may end up making a loss.
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If the information and data within the block found to be correct, then the validator is subjected to receive rewards in form of additional tokens. Whereas, if the transactions are found to be wrong or incorrect, considering it as a wicked and dull manner, the validator ends up losing a part of his own staked tokens.
In the consensus mechanism of Proof-of-Time (PoT), network validators get chosen through a voting system. Reputation and the time spent on the network were among some basic criteria for a validator to fulfill in order to get selected. Primarily, PoT is based on a modified version of PoS, known as delegated proof-of-stakes. Most of the time, the digital ledger uses proof-of-time also known as Timechain.
Nancy J. Allen is a crypto enthusiast, with a major in macroeconomics and minor in business statistics. She believes that cryptocurrencies inspire people to be their own banks, and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning. She frequently researches, and posts content on the top altcoins, their theoretical working principles and technical price predictions.
