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Blockchain Consensus Definition

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 >>

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 >>

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 >>

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 >>

Chain Documentation

Chain Documentation

In this guide we discuss the design of the federated consensus protocol used by the Chain Protocol: its goals, use cases, threat models, and areas for future improvement. Federated consensus is a mechanism ensuring that all participants in a network agree on a single transaction log. This prevents different versions of the ledger being shown to different participants thus preventing double-spending of assets as well preventing history from being edited. While the blockchain validation rules specify whether a given blockchain is valid, the consensus protocol makes sure there is only one valid blockchain on a given network. This consensus protocol is designed to be practically useful under a certain set of requirements and assumptions commonly encountered in permissioned blockchain networks. The Chain Protocol is capable of supporting alternative consensus protocols. For a detailed description of the federated consensus protocol, see the formal specification . The Chain Protocol blockchain validation rules are intentionally agnostic as to what kind of consensus protocol is enforced. Additionally, they do not play a role in the process by which consensus is reached. Instead, blockchains provide a way for network participants to evaluate whether consensus has been reached: namely, consensus programs. The consensus program specifies a set of conditions that must be satisfied for a block to be accepted. The separation of consensus logic from blockchain validation rules, together with flexibility of consensus programs, allows networks to adopt of arbitrary consensus protocols, even including ones based on proof-of-work and proof-of-stake. The consensus program for each block is specified in the header of the previous block. When the block is validated by a network participant 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 >>

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 >>

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 >>

What Is Distributed Consensus In Bitcoin? - Quora

What Is Distributed Consensus In Bitcoin? - Quora

What is distributed consensus in Bitcoin? Answered Dec 11, 2017 Author has 1.3k answers and 1.1m answer views The term distributed consensus indicates the fact and the way in which the nodes in a blockchain sincronize their data and reach a consensus regarding transactions happening i.e. Alice received 3 bitcoins from Bob. Since the majority of the nodes should reach a consensus before updating the distributed ledger the consensus they reach is called distributed. There are a number of consensus mechanisms or algorithms. So in order to reach consensus the Bitcoin blockchain uses Proof of Work, while Ethereum uses Proof of Work currently, but is moving towards Proof of Stake. The Hyperledger Sawtooth uses Proof of Elapsed Time. 705 Views View Upvoters Not for Reproduction In very simple terms, there is no central authority like a clearing house or central banks to approve the transactions as it happens in our day-to-day transactions. In Bitcoin transactions, the technology underlying it called Blockchain uses distributed consensus where multiple computers or nodes approve these transactions based on mathematical calculations. All these nodes have to arrive at a consensus to approve or reject the transaction. This consensus mechanism is the biggest selling point of Blockchain. The details of how they approve, why they should approve, what happens if one of them disapprove for financial gains are some huge and heavy to digest topics in themself. 1.2k Views View Upvoters Not for Reproduction 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 >>

Proof-of-stake - Wikipedia

Proof-of-stake - Wikipedia

This article may rely excessively on sources too closely associated with the subject, potentially preventing the article from being verifiable and neutral . Please help improve it by replacing them with more appropriate citations to reliable, independent, third-party sources . ( Learn how and when to remove this template message ) Proof-of-stake (PoS) is a type of algorithm by which a cryptocurrency blockchain network aims to achieve distributed consensus . In PoS-based cryptocurrencies the creator of the next block is chosen via various combinations of random selection and wealth or age (i.e. the stake). In contrast, the algorithm of proof-of-work (PoW) based cryptocurrencies (such as bitcoin ) rewards participants who solve complicated cryptographical puzzles in order to validate transactions and create new blocks (i.e. mining ). Proof-of-stake must have a way of defining the next valid block in any blockchain. Selection by account balance would result in (undesirable) centralization, as the single richest member would have a permanent advantage. Instead, several different methods of selection have been devised. Nxt and BlackCoin use randomization to predict the following generator, by using a formula that looks for the lowest hash value in combination with the size of the stake. [1] [2] [3] Since the stakes are public, each node can predict - with reasonable accuracy - which account will next win the right to forge a block. Peercoin 's proof-of-stake system combines randomization with the concept of "coin age," a number derived from the product of the number of coins times the number of days the coins have been held. Coins that have been unspent for at least 30 days begin competing for the next block. Older and larger sets of coins have a greater probability of sign 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 >>

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 >>

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