Consensus Algorithm

A mechanism by which data is synchronised across computer and kept in a consistent state. An integral part of a blockchain network.

Many consensus algorithms use tokens rewards as an economic incentive for partipants to maintain servers which mine, stake or participate in the consensus algorithm.

Proof of Work

An algorithm where blocks in the blockchain are validated by the consumption of physical resources (energy, compute cycles) to solve hash-function inversion problems to create a global sortition function.

Proof of Stake

An algorithm where blocks in the blockchain are validated by the staking of on-chain assets to provide a weighted global sortition function where virtual wealth corresponds to probabilistic governance.

Proof of Authority

An algorithm where blocks in the blockchain are validated by a closed and fixed set of pre-selected authorities which confirm transactions via quorum voting. Often uses mechanisms from classical computer science algorithms such as Paxos and Raft.

Proof of Space

An algorithm where blocks in the blockchain are validated by the consumption of digital resources such as random access memory or disk space. The global sortition functions weighted based on the size and availability of these digital space resources.

References

1. Rosenthal, David. n.d. ‘Stanford Lecture on Cryptocurrency’. Accessed 2 March 2022. https://blog.dshr.org/2022/02/ee380-talk.html.
2. Plant, Luke. 2022. ‘The Technological Case against Bitcoin and Blockchain’. Luke Plant’s Home Page. 5 March 2022. https://lukeplant.me.uk/blog/posts/the-technological-case-against-bitcoin-and-blockchain/.
3. Weaver, Nicholas. 2018. Blockchains and Cryptocurrencies: Burn It With Fire. Berkeley School of Information. https://www.youtube.com/watch?v=xCHab0dNnj4.
4. Schneier, Bruce. 2019. ‘There’s No Good Reason to Trust Blockchain Technology’. Wired Magazine. https://www.wired.com/story/theres-no-good-reason-to-trust-blockchain-technology/.