In blockchain cryptography, various consensus mechanisms determine how transactions are validated and how nodes reach agreement on the state of the ledger. These mechanisms often involve different "proof of N" types. Here are some of the main ones:
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Proof of Work (PoW):
- Nodes (miners) solve complex mathematical puzzles to validate transactions and create new blocks. The first to solve the puzzle gets to add the block to the blockchain and receives a reward. This is used by Bitcoin and Ethereum (before Ethereum moved to PoS).
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Proof of Stake (PoS):
- Validators are chosen to create new blocks based on the number of tokens they hold and are willing to "stake" as collateral. The more tokens a validator stakes, the higher their chance of being selected. This is used by Ethereum (after the move to PoS), Cardano, and others.
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Delegated Proof of Stake (DPoS):
- Token holders vote for a small number of delegates who will validate transactions and create new blocks. This is used by EOS, Tron, and others.
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Proof of Authority (PoA):
- Validators are pre-approved and selected based on their reputation and identity. This model is often used in private or consortium blockchains where trust is higher among participants. Examples include VeChain and some implementations on Ethereum networks.
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Proof of Burn (PoB):
- Participants prove their commitment to the network by "burning" (destroying) a portion of their cryptocurrency, thereby gaining the right to mine or validate transactions. This mechanism is designed to mimic the resource expenditure of PoW without requiring physical hardware.
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Proof of Capacity (PoC) / Proof of Space (PoSpace):
- Miners allocate a certain amount of hard disk space for mining. The more space allocated, the higher the chance of mining a block. This is used by projects like Burstcoin and Chia.
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Proof of Elapsed Time (PoET):
- Utilized primarily in permissioned blockchains, it involves nodes waiting for a randomly chosen amount of time before they are allowed to propose a new block. The node with the shortest wait time gets to add the block to the blockchain. This mechanism is used by Hyperledger Sawtooth.
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Proof of Activity (PoA):
- A hybrid approach that combines elements of PoW and PoS. Initially, miners solve a PoW puzzle, but then the block is verified by a set of randomly chosen validators (based on their stake). This approach aims to balance security and energy efficiency.
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Proof of Importance (PoI):
- Used by the NEM blockchain, this system takes into account not just the amount of stake but also the network activity and interactions of the nodes, thereby promoting active participation in the network.
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Proof of Capacity (PoC):
- This is similar to Proof of Space but focuses on the storage capacity that miners allocate. The more storage space a miner commits, the higher their probability of generating the next block.
- Proof of Weight (PoWeight):
- Used in the Algorand blockchain, it combines various factors such as the amount of stake, transaction volume, and participation history to determine the likelihood of being chosen to create the next block.
Each consensus mechanism has its own advantages and trade-offs in terms of security, scalability, energy efficiency, and decentralization. The choice of a consensus mechanism depends on the specific goals and requirements of the blockchain network.