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Blockchain Consensus Definition

Consensus - Bitcoin Wiki

Consensus - Bitcoin Wiki

"Consensus" is an ambiguous and problematic word which can mean several different things, both in Bitcoin and elsewhere. It is often used to hand-wave decision issues as, "well, everyone will basically agree." In Bitcoin, the word "consensus" is unfortunately used in several very different ways. Really, all of these usages should be replaced by distinct, different words, and the word consensus should never be used. The consensus rules are the specific set of rules that all Bitcoin full nodes will unfailingly enforce when considering the validity of a block and its transactions. For example, the Bitcoin consensus rules require that blocks only create a certain number of bitcoins. If a block creates more bitcoins than is allowed, all full nodes will reject this block, even if every other node and miner in the world accepts it. Adding new consensus rules can generally be done as a softfork , while removing any consensus rule requires a hardfork . Rules regarding the behavior of the mere network protocol are not consensus rules, even if a change to the network protocol behavior breaks backward-compatibility. The consensus rules are only concerned with the validity of blocks and transactions. These rules are called consensus rules because Bitcoin requires that all participants in the Bitcoin economy have consensus (with the meaning of the next definition) as to the consensus rules. If the economy disagrees about the consensus rules, then the currency and economy splits into two or more totally-independent pieces. Unlike the other two definitions, this is a very concrete concept. For clarity, these rules should be called hard rules or the rules of Bitcoin instead of consensus rules. "Consensus" can mean something like "no significant objection among the set of people who 'ma Continue reading >>

A (short) Guide To Blockchain Consensus Protocols - Coindesk

A (short) Guide To Blockchain Consensus Protocols - Coindesk

A (Short) Guide to Blockchain Consensus Protocols We hear plenty of talk of how public blockchains are going to change the world, but to function on a global scale, a shared public ledger needs a functional, efficient and secure consensus algorithm. A consensus algorithm, like bitcoin's proof of work (the one we hear about most often), does two things: it ensures that the next block in a blockchain is the one and only version of the truth, and it keeps powerful adversaries from derailing the system and successfully forking the chain. In proof of work, miners compete to add the next block (a set of transactions) in the chain by racing to solve a extremely difficult cryptographic puzzle. The first to solve the puzzle, wins the lottery. As a reward for his or her efforts, the miner receives 12.5 newly minted bitcoins and a small transaction fee. Yet, although a masterpiece in its own right, bitcoin's proof of work isn't quite perfect. Common criticisms include that it requires enormous amounts of computational energy , that it does not scale well (transaction confirmation takes about 10-60 minutes) and that the majority of mining is centralized in areas of the world where electricity is cheap. Bitcoin creator Satoshi Nakamoto woke us up to the potential of the blockchain, but that doesn't mean we can't keep searching for faster, less centralized and more energy-efficient consensus algorithms to carry us into the future. While not a comprehensive list, the following are a few of the alternative approaches being kicked around out there. The most common alternative to proof of work is proof of stake. In this type of consensus algorithm, instead of investing in expensive computer equipment in a race to mine blocks, a 'validator' invests in the coins of the system. Note the te Continue reading >>

Blockchain Consensus Algorithm: Pow, Pos, And Beyond

Blockchain Consensus Algorithm: Pow, Pos, And Beyond

Blockchain Consensus Algorithm: PoW, PoS, and Beyond One of the most critical aspects to understand blockchain its speed, applications, and potential is consensus algorithms. It determines everything from network security, confirmation speed, to environmental friendliness. As crucial as it is, few comprehend how such a dynamic concept works in practice; and among the most misunderstood aspects include just how new blocks of information are securely added to the ledger, consideringnocentralized authority is engaged to maintain the integrity of the network. As a recap from an earlier post , blockchain provides a way for transactions to be ordered and verified in a distributed ledger and ultimately provides a record of truth over a period of time. Without a central intermediary, the network of participating users that make up this system need to agree on the validity of whats being added to the ledger, using a set ofpre-definedrules. Aconsensusneeds tobe reached for the majority of the nodes in the network. But just how effective it is to implement such a consensus remains a work in progress till this very day. The problem of ensuring reliability in decentralized systems was first formalized in the scholarly paper The Byzantine Generals Problem , published back in 1982. In the illustration created by the authors, a Byzantine army is attacking a city and has it completely encircled. To proceed, the generals who are dispersed around the citys periphery must agree on a battle plan; but while some generals want to attack further, others want to retreat. And to complicate matters, the generals are so far apart from each other that messengers are required to deliver communications between them, while one or more generals may also be a traitor intending to sabotage the situation Continue reading >>

From Blockchain Consensus Back To Byzantine Consensus

From Blockchain Consensus Back To Byzantine Consensus

From blockchain consensus back to Byzantine consensus Author links open overlay panel VincentGramoli We compare the different consensus problems tackled by blockchains, the distributed computing literature and a more recent definition. We propose a formalization of Bitcoin and Ethereum consensus algorithms. We warn about the dangers of using these blockchains without understanding precisely the guarantees their consensus offers. We present a survey of attacks against proof-of-work blockchain systems. Consensus is a fundamental problem of distributed computing. While this problem has been known to be unsolvable since 1985, existing protocols were designed these past three decades to solve consensus under various assumptions. Today, with the recent advent of blockchains, various consensus implementations were proposed to make replicas reach an agreement on the order of transactions updating what is often referred to as a distributed ledger. Very little work has however been devoted to explore its theoretical ramifications. As a result existing proposals are sometimes misunderstood and it is often unclear whether the problems arising during their executions are due to implementation bugs or more fundamental design issues. In this paper, we discuss the mainstream blockchain consensus algorithms and how the classic Byzantine consensus can be revisited for the blockchain context. In particular, we discuss proof-of-work consensus and illustrate the differences between the Bitcoin and the Ethereum proof-of-work consensus algorithms. Based on these definitions, we warn about the dangers of using these blockchains without understanding precisely the guarantees their consensus algorithm offers. In particular, we survey attacks against the Bitcoin and the Ethereum consensus algori Continue reading >>

Consensus Mechanisms Of The Blockchain Codecentric Ag Blog

Consensus Mechanisms Of The Blockchain Codecentric Ag Blog

Welcome to the first article of the blockcentric column. We created it for blogging about Blockchain and all related topics. It will contain exciting articles about technology, projects, organisation and business concerns. They will contain knowledge and findings from our 20% time work but also news from the area. We are looking forward to your feedback on the column and exciting discussions about your use cases. A blockchain creates trust, traceability, and immutability through a peer-to-peer network. All transactions in the network, such as payments or event tracking in a supply chain, are confirmed by participants in the network. Thus, no central authority alone controls the validity of these events. These acknowledgments given by the participants lead to a consensus in the network, with which the data on the blockchain is continually persisted. So the majority of the participants decide whether a transaction is valid, instead of a single player. To create and implement a consensus, there are several mechanisms that I would like to explain and discuss in the following. Each Blockchain needs to choose one mechanism that handles the agreement of all participants onto a truth about their data. It could be imagined as a consistent way to get all politicians of a parliament to agree on one opinion. As politicians probably need to discuss about this, all participants of a blockchain network do this by communicating with each other over the network. The communication protocols are thereby implemented in the software that is executed on all involved devices. What is communicated here, however, is not a political opinion but the data base of the blockchain, such as the transaction history of a currency like Bitcoin . Currently there are mainly two of those consensus mechanis Continue reading >>

Review Of Blockchain Consensus Mechanisms

Review Of Blockchain Consensus Mechanisms

PR at @Wavesplatform #blockchain #cryptocurrency #fintech $WAVES Review of blockchain consensus mechanisms Cryptocurrencies use distributed ledgers or blockchains to record information primarily about the balance of every address for value transfer platforms (like bitcoin and most cryptocurrencies), though the approach can be extended to any kind of information. Key to the operation of the blockchain is that the network should collectively agree on the contents of the ledger: instead of authority for keeping accounts being centralised in one entity, like a bank, it is shared amongst everyone. This requires that the network maintains consensus around the information recorded on the blockchain. How this consensus is achieved impacts the security and economic parameters of the protocol. Here are five examples of how its done. Proof of work is the first distributed consensus mechanism, pioneered by bitcoins pseudonymous creator, Satoshi Nakamoto. Many cryptocurrencies followed suit, including Ethereum. In PoW, all the computers in the network that are tasked with maintaining the security of the blockchain known as Miners in bitcoin work to solve a puzzle consisting of a mathematical function called a hash. This task is straightforward (for a computer) but extremely repetitive, and therefore computationally expensive. Computers compete to find a hash with specific properties. The computer that finds the answer first the proof that they have done the necessary work is allowed to add a new block of transactions to the blockchain. They are rewarded with a tranche of newly-minted bitcoins (currently 12.5 BTC per block, or roughly every 10 minutes), plus all of the small transaction fees users have paid to send coins. PoW operates on the principle that it is expensive to add a t Continue reading >>

Blockchain Dictionary

Blockchain Dictionary

An in-depth list of the most common terms used in blockchain space As mentioned in previous articles and tweets , Im very bullish on the future of blockchain tech. With that being said, the hardest part for me to wrap my head around is how we progress from a small subset of the population thats even aware of this technology to achieving wide-scale adoption. Yesterday, Fred Ehrsam posted the answer : The biggest bottleneck to solving scalability is the number of people working on the problem. To do my part in helping solve the awareness and scalability problem, Ive complied a dictionary of the terminology most commonly used in the blockchain space (with the help of Wikipedia , GitHub , Blockchain Hub , Blockchain Technologies , and TechTarget ). I hope this serves as a valuable resource for those interested in learning and contributing to the blockchain revolution. Addresses (Cryptocurrency addresses) are used to receive and send transactions on the network. An address is a string of alphanumeric characters, but can also be represented as a scannable QR code. Agreement ledgers are distributed ledgers used by two or more parties to negotiate and reach agreement. Altcoin is an abbreviation of Bitcoin alternative. Currently, the majority of altcoins are forks of Bitcoin with usually minor changes to the proof of work (POW) algorithm of the Bitcoin blockchain. The most prominent altcoin is Litecoin. Litecoin introduces changes to the original Bitcoin protocol such as decreased block generation time, increased maximum number of coins and different hashing algorithm Attestation Ledgers are distributed ledgers that provide a durable record of agreements, commitments or statements, providing evidence (attestation) that these agreements, commitments or statements were made. ASIC Continue reading >>

Basic Primer: Blockchain Consensus Protocol

Basic Primer: Blockchain Consensus Protocol

Basic Primer: Blockchain Consensus Protocol Basic Primer: Blockchain Consensus Protocol guide. A blockchain is a decentralized peer-to-peer system with no central authority figure. While this creates a system that is devoid of corruption from a single source, it still creates a major problem. Think of a normal centralized organization. All the decisions are taken by the leader or a board of decision makers. This isnt possible in a blockchain because a blockchain has no leader. For the blockchain to make decisions, they need to come to a consensus using consensus mechanisms. So, how do these consensus mechanisms work and why did we need them? What are some of the consensus mechanisms used in cryptocurrencies? We will answer these questions in this guide.Basic Primer: Blockchain Consensus Protocol This is how Wikipedia defines consensus decision-making: Consensus decision-making is a group decision-making process in which group members develop, and agree to support a decision in the best interest of the whole. Consensus may be defined professionally as an acceptable resolution, one that can be supported, even if not the favourite of each individual. Consensus is defined by Merriam-Webster as, first, general agreement, and second, group solidarity of belief or sentiment. In simpler terms, consensus is a dynamic way of reaching agreement in a group. While voting just settles for a majority rule without any thought for the feelings and well-being of the minority, a consensus on the other hand makes sure that an agreement is reached which could benefit the entire group as a whole. From a more idealistic point-of-view, Consensus can be used by a group of people scattered around the world to create a more equal and fair society. A method by which consensus decision-making is a Continue reading >>

Consensus Mechanisms Used In Blockchain

Consensus Mechanisms Used In Blockchain

This is a write up on consensus mechanisms on Blockchain and how they compare. I try to dive into the mechanics, features and limitations of each consensus mechanisms. The purpose of a consensus algorithm is to allow for the secure updating of a state according to some specific state transition rules, where the right to perform the state transitions is distributed among the economic set (Buterin, 2014). The economic set can be users which are given the right to collectively perform transitions through an algorithm (Buterin, 2014). The economic set in question should be securely decentralized. This refers to no single actor or a set of colluding actors can take up majority of the set. Proof-of-Work is currently the most common consensus mechanism for blockchain technologies. The miner builds a candidate block filled with transactions. Then the miner calculates the hash of his block header and see if it fits the current target. If the hash does not fit, it will modify the nonce, usually through adding one to it, and then try again. The current difficulty in bitcoin network requires miners to try quadrillions of times before finding a nonce that fits. It is virtually impossible to find two different inputs that produce the same result after cryptographic hashing. Recall, that the output of the cryptographic hash function changes drastically when there is a minor change to the input. See Diagram below. This is a safety feature to ensure one way cryptography. A nonce is an arbitrary number that may only be used once. Blockchain uses a nonce to tune the difficulty of solving the hashing function. Diagram below is used to show nonce attached to input text I am Satoshi Nakamoto and the resulting SHA-256 output. Each phrase produces a completely different output. The number at Continue reading >>

Consensus Algorithms Inblockchain

Consensus Algorithms Inblockchain

Posted on August 13, 2017 by Prabhat Kashyap When we talk about the blockchain, the first thing that came up in our mind is the security and the security because of the blockchain consensus algorithm. Those who know about the blockchain know that we keep the ledger transactions synchronized across the network to ensure that ledgers only update when the appropriate participants approve transactions and that when ledgers do update, they update with the same transactions in the same order is called consensus. Here we will discuss the three different consensus algorithms. Imagine that several divisions of the Byzantine army are camped outside an enemy city, each division commanded by its own general. The generals can communicate with one another only by messenger. After observing the enemy, they must decide upon a common plan of action. However, some of the generals may be traitors, trying to prevent the loyal generals from reaching an agreement. The generals must decide on when to attack the city, but they need a strong majority of their army to attack at the same time. The generals must have an algorithm to guarantee that (a) all loyal generals decide upon the same plan of action, and (b) a small number of traitors cannot cause the loyal generals to adopt a bad plan. The loyal generals will all do what the algorithm says they should, but the traitors may do anything they wish. The algorithm must guarantee condition (a) regardless of what the traitors do. The loyal generals should not only reach an agreement but should agree upon a reasonable plan. Above story represents the Byzantine Generals Problem. There are many solutions for this problem, but we will talk about Practical Byzantine fault tolerance (PBFT). In 1999, Miguel Castro and Barbara Liskov introduced the Pract Continue reading >>

Intro To Blockchain: Consensus Algorithms - Part 1 | Xoken

Intro To Blockchain: Consensus Algorithms - Part 1 | Xoken

This question can be best answered by taking a look at the history of government. A lot of the same principles that apply to democracy, also apply to blockchains. Democracy was founded on the basis that power belongs to the people, and blockchains achieve a similar decentralization. The pillars of democracy that many of us experience every day, has not yet transferred over to technology. DLT stands for Distributed Ledger Technology and is one of the largest technological advancements of our time. A distributed ledger is just a database that is spread over multiple sites. This allows for more consistent uptime and the elimination for a centralized power. A blockchain is a type of distributed ledger. The word blockchain is pretty self-explanatory. In the most literal sense, blocks are added to a chain. The addition of every following block, makes it harder to alter the original block (in order to get back to the original, every block after it would need to be removed). Each block is composed of a group of transactions that is bundled together by a node. The way that the node does this, is by utilizing a consensus algorithm, which will be explained in the next section. After a node solves the block, it is broadcasted on the network to the other nodes. If the other nodes verify that the solution provided is correct, the block is accepted onto the chain. Perhaps the single most defining and important characteristic of a blockchain is the chosen consensus algorithm. This algorithm is what verifies that a block that is to be added to the blockchain is the real version. Without a consensus algorithm, anyone could potentially add information to the blockchain, which would derail the legitimacy of the entire system. There are two main types of consensus algorithms: 1. Proof-of-w Continue reading >>

Blockchain Is Meaningless

Blockchain Is Meaningless

Bitcoin, Ethereum, and other cryptocurrencies have entered the mainstream discourse, but theyve also been joined by a concept that is widely circulated, but poorly understood: the blockchain or just blockchain. The idea of a blockchain, the cryptographically enhanced digital ledger that underpins Bitcoin and most cryptocurrencies, is now being used to describe everything from a system for inter-bank transactions to a new supply chain database for Walmart . The term has become so widespread that its quickly losing meaning. What is a blockchain? The word is a buzzword that is increasingly ill-defined, David Gerard, author of Attack of the 50 Foot Blockchain: Bitcoin, Blockchain, Ethereum & Smart Contracts, said in an email. There are countless blockchain explainers in text, audio, and video around the web. Almost all of them are wrong because they start from a false premise. There is no universal definition of a blockchain, and there is widespread disagreement over which qualities are essential in order to call something a blockchain. There is no universal definition of a blockchain The Bitcoin system is considered the first blockchain the epiphany that launched the blockchain industry that proponents say will revolutionize money, government, and beyond. Bitcoin was designed to be public and allow anyone to join, and its blockchain was born out of the need to keep people honest in the absence of a central authority. The design sacrificed efficiency in order to ensure that theft wouldnt pay because rewriting the ledger would require so much computational power that it would be more costly than any potential upside. In order to achieve this effect, the Bitcoin blockchain consists of a digital ledger that records all transactions from the beginning of time to the present. C Continue reading >>

Explaining Blockchainhow Proof Of Work Enables Trustless Consensus

Explaining Blockchainhow Proof Of Work Enables Trustless Consensus

Software engineer with interests in social innovation, psychology, philosophy, ethics and spirituality. Co-founder @ coinfund.io and Consensus Labs, Inc. Explaining blockchain how proof of work enables trustless consensus Blockchain technology, of which Bitcoin is an example, can be quite hard to understand. Mainly this is because core concepts tend to get lost among the complexity of non-essential details. This article tries to fill the gap between general audience literature that is entirely uninformative to computer professionals and highly specialized literature that is informative, but often overwhelming. It is written for people with some technology background but without in-depth familiarity with this particular field. The subject of this article is technology of distributed trustless consensus, for this is the one area in which blockchain systems, like Bitcoin, are indeed a major breakthrough. When it comes to other goals, such as distributed data storage, anonymity, transaction verifiability, data obfuscation, shared ledgers, micropayments, high throughput, digital contracts, and so on, cryptographic blockchain systems are, essentially, incidental. Solutions to these problems are well known outside of the blockchain space and, consequently, I will not focus on them here. The main innovation that Satoshi Nakamoto introduced in his article is using so-called proof of work (POW) to create distributed trustless consensus and solve the double-spend problem. POW is not a new idea, but the way Satoshi combined this and other existing concepts cryptographic signatures, merkle chains, and P2P networks into a viable distributed consensus system, of which cryptocurrency is the first and basic application, was quite innovative. Proof of work is a requirement that expensiv Continue reading >>

Consensus - Blockchain

Consensus - Blockchain

New transactions are broadcast to all nodes. Each node collects new transactions into a block. Each node works on finding a difficult proof-of-work for its block. When a node finds a proof-of-work, it broadcasts the block to all nodes. Nodes accept the block only if all transactions in it are valid and not already spent. Nodes express their acceptance of the block by working on creating the next block in the chain, using the hash of the accepted block as the previous hash. Nodes always consider the longest chain to be the correct one and will keep working on extending it. Cryptocurrencies such as Bitcoin enable users to submit payment transactions without going through a centralized trusted organization. Bitcoin relies on proof-of-work mining to secure consensus which is problematic because mining requires a massive expenditure of energy, confirmation of transactions is slow, and security is difficult to quantify. There are proposals to develop new consensus algorithms, such as Proof of Stake consensus and Byzantine fault tolerance consensus. Consensus without Mining - Proof of Stake In the Proof of Stake model used by, network security is governed by peers having a stake in the network. The incentives provided by this algorithm do not promote centralization in the same way that Proof of Work algorithms do. The network has will be highly decentralized because a large number of unique accounts are contributing blocks to the network by voting, and block creation reward is shared among the participant in proportion to their stake. In a nothing at stake attack, forgers attempt to build blocks on top of every fork they see because doing so costs them almost nothing, and because ignoring any fork may mean losing out on the block rewards that would be earned if that fork were Continue reading >>

Consensus In Blockchain Systems. Inshort.

Consensus In Blockchain Systems. Inshort.

Scientist and Risk Taker math, informatics and their applications, in particular ML and blockchain aspiring renaissance man and polymath Consensus in Blockchain Systems. InShort. Blockchain technologies top the lists of 2017s hot trends. Many companies already back their products with blockchain technologies. Competitors use different approaches to blockchain technologies, emphasizing different aspects and pitching them as features to their customers. In this post I will provide an overview of the role of one of those particular aspects of blockchain technologies consensus. Blockchains are diverse and can be approached from a variety of perspectives. For the sake of this article, I would like to define a blockchain as a public, decentralized database, that keeps public records in an append-only fashion. Moreover, once added into the database (the blockchain) a record cannot be modified and it is very difficult to falsify entries. This last feature is called persistence. When an entry in the database (the blockchain) needs to be updated, a new record must be appended to the existing information. Finally, each of records can be viewed by any member of the public, allowing for any person to individually verify the authenticity of each transaction recorded for any single entry in the database (the blockchain). This transparency means that blockchains are auditable. CC-BY-3 Theymos from Bitcoin wiki vectorization: The main chain (black) consists of the longest series of blocks from the first (genesis) block (green) to the current block. Orphan blocks (purple) exist outside of the mainchain. But why bother with blockchains over traditional databases anyway? Blockchains become immediately appealing as soon as a database needs to be decentralized. An organization looking to av Continue reading >>

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