How Different Consensus Protocols Solve the Byzantine General’s Problem
Consensus algorithms are the lifeblood of cryptocurrency networks, ensuring that decentralised systems operate securely and efficiently. Each of them offers unique benefits.
So today, we will explore how these algorithms shape the diverse and ever-evolving world of digital currencies. Let’s get started!
What is the Byzantine Generals Problem?
The Byzantine Generals Problem is a thought experiment for electronic distributed networks. Its purpose is to find a way to synchronise independent participants within a network.
The Core of the Problem: Imagine several generals (representing network nodes) guarding a city. They can only communicate by sending messengers (akin to transactions). The main challenge they face is agreeing on a unified plan, whether to attack or retreat (reaching consensus). However, some generals are traitors, trying to disrupt the agreement by sending misleading messages.
The concept was first introduced in a scientific paper published in 1982 by Leslie Lamport, Robert Shostak, and Marshall Pease. This problem is particularly relevant to distributed systems where there is no central node that the rest of the network participants can trust. In a real-world scenario, such a node could be something like a central bank, which manages the issuance of fiat currency and its distribution to commercial banks.
Since cryptocurrencies are fundamentally based on the principles of decentralization without a single governing body, solving this problem has become a cornerstone in designing blockchain-based networks.
How Did Satoshi Nakamoto Solve the Byzantine Generals Problem?
In 2008, Satoshi Nakamoto, the creator of Bitcoin, introduced a practical solution to the Byzantine General’s Problem. Nakamoto designed the Bitcoin protocol and implemented the Proof-of-Work (PoW) consensus algorithm, which effectively removed the need for trust by establishing clear rules for reaching consensus (agreement) among the nodes (generals) in the Bitcoin network.
The PoW algorithm enables each node to verify that others have performed their tasks correctly and adhere to the agreed-upon protocol. This is accomplished through blockchain technology, cryptography, and economic incentives for miners, who play a crucial role in maintaining the integrity of the consensus and protecting the network from malicious actions. If a node attempts to perform “incorrect work,” the other participants in the network will detect this and prevent any unauthorised or harmful activity from occurring.
What Consensus Algorithms Are Used in Cryptocurrencies?
Beyond Proof-of-Work, the Proof of Stake (PoS) and Byzantine Fault Tolerance (BFT) algorithms are some of the most common and reliable solutions to the Byzantine General’s Problem.
- Proof of Stake (PoS) is currently one of the most popular consensus mechanisms in the crypto market. Instead of relying on miners like in PoW, network control is given to holders of the native coin. This approach’s main advantage is its significantly lower energy consumption than PoW.
- Byzantine Fault Tolerance (BFT) is designed to scale PoS blockchain networks. Unlike other algorithms, BFT achieves consensus through collective decision-making. Nodes exchange transactions until two-thirds of all nodes reach the same conclusion.
There are many variations and hybrid algorithms in the market. One example is Tendermint, which powers the Cosmos blockchain and combines Delegated Proof-of-Stake (DPoS) with BFT. Similarly, Solana uses DPoS and implements the BFT consensus algorithm known as Practical Byzantine Fault Tolerance (pBFT).
Other Consensus Algorithms Used in Cryptocurrencies
In addition to well-known algorithms like PoW, PoS, and BFT, the cryptocurrency space utilises more than a dozen other consensus mechanisms. Here are some of the notable ones:
- Leased Proof of Stake (LPoS): A variation of PoS where users can lease their tokens to “main” nodes, allowing them to participate in block generation. This consensus is used in the Waves blockchain.
- Proof of Elapsed Time (PoET): A modification of PoW that leverages CPU power. It incorporates the principles of a fair lottery algorithm, where a validator is randomly chosen in proportion to the resources they have invested. PoET is used in solutions from Hyperledger.
- Delegated Byzantine Fault Tolerance (DBFT): A hybrid algorithm combining elements of PBFT and DPoS. This consensus model is implemented in the NEO blockchain.
- Directed Acyclic Graphs (DAG): Although not a consensus algorithm, DAG is an alternative to blockchain technology. It consists of circles and lines instead of blocks, resembling a graph. While traditional consensus algorithms can be used in DAG-based networks, the method of recording information is fundamentally different. An example of such a hybrid is Hashgraph.
- Proof of Activity (PoA): A hybrid mechanism combining PoW and PoS elements. Decred is the most well-known cryptocurrency using this consensus method.
- Proof of Importance (PoI): The NEM network notably uses this consensus method. It is based on a rating system, where the higher a validator’s rating, the greater their chance of finding blocks.
- Proof of Capacity (PoC): PoC utilises hard drive space instead of computational resources. This consensus is employed in networks like Chia and BitTorrent.
- Proof-of-Personhood (PoP): A unique consensus that verifies “humanness,” ensuring that each participant in the project has an equal vote and share of rewards. The cryptocurrency Worldcoin is a prominent example of this approach.
These diverse algorithms highlight the innovation and experimentation within the cryptocurrency ecosystem, each offering unique benefits and use cases.
Conclusion
The diversity of consensus algorithms highlights the innovation within the cryptocurrency space. Each offers unique benefits and applications. As the industry evolves, these mechanisms will continue to shape the future of blockchain and decentralised finance.
About Concorpad
Concorpad stands at the forefront as an innovative launchpad platform operating on the robust Concordium blockchain, poised to revolutionise the IDO landscape for inventive ventures. Our core mission is firmly rooted in bridging the divide between visionary concepts and the market, providing an all-encompassing framework from initiating token launch to its seamless listing. At Concorpad, our unwavering dedication revolves around cultivating growth and propelling innovation within the expansive realm of the blockchain ecosystem.
