What is a consensus mechanism: PoW, PoS, DPoS

When you start to dabble in blockchain or cryptocurrency, it seems that you often encounter brain-burning terms such as PoW and PoS. Today, let's talk about what is PoW, PoS, DPoS.

PoW, PoS, DPoS, in one sentence, are the three mainstream consensus mechanisms of the blockchain.

The blockchain, in layman's terms, is a decentralized ledger. It's just that this ledger is different from the traditional ledger. It is not accounted for by accountants or a few people, but everyone can participate in the bookkeeping.

Moreover, this bookkeeping requires a rule that everyone agrees with, that is, "how to book is effective", and this rule that everyone agrees to is the consensus mechanism of the blockchain.

For example, if your family plans to travel abroad, and after negotiation, you choose Thailand, then traveling to Thailand is the consensus formed by your family. The way of negotiation is that the minority obeys the majority, and the minority obeys the majority is the consensus mechanism for your family to determine the tourist destination.

Similarly, PoW, PoS, and DPoS represent the three main accounting rules of the blockchain network. They play a very important role and are directly related to the distribution of accounting rights and related income. It is no exaggeration to say that the consensus mechanism is the soul of the blockchain.

PoW (Proof-of-Work) Proof of Work Mechanism

Proof of Work, simply put, is a certificate that confirms that you have done a certain amount of work. It's like your college diploma, proving that you did have four years of college experience. The workload proof mechanism is to use the workload results to prove the size of the contribution, and then determine the accounting rights and rewards according to the size of the contribution.

This proof process is carried out by relying on the computer to perform mathematical operations. It can be understood as: everyone is going to answer the same question. Whoever calculates it first will be responsible for accounting and get corresponding compensation. This compensation is the digital currency generated by the network.

For example, in the Bitcoin network system, whoever solves the problem first will be rewarded with Bitcoin first.

The advantages of PoW are that it is completely decentralized, fair and equitable, and does not require a centralized management organization. Fair competition is achieved between users (ie nodes), and whoever solves the problem first will receive the corresponding benefits.

Its main disadvantage is the waste of energy. It takes computing power for everyone to calculate the problem together, and in the end, only the work done by one user is effective, and the work done by others is useless.

Computers are powered by electricity, and everyone uses computers to solve problems together, which actually consumes a lot of power resources. For example, Bitcoin uses the PoW consensus mechanism, which consumes billions of dollars worth of electricity every year, and has been criticized for a long time.

PoS (Proof-of-Stake) Proof of Stake Mechanism

Proof-of-stake mechanism, that is, the more shares you have, the more rewards you can get. The equity here refers to the amount and time of the digital currency you hold, and the equity is distributed according to it, similar to the dividend system of stocks.

The more coins you hold, the longer the holding time, that is, the greater the coin age (coin age = number of coins * holding time), the more dividends you can get, and the greater the accounting. right.

There are three advantages of PoS:

First, it consumes less energy and does not need to consume a lot of energy like a proof-of-work mechanism.

Second, the cost of doing evil is high. If you want to attack the network, you must have 51% of the currency age, which is very difficult. Not only does it require a large amount of currency, but it also needs to be held for a long enough time;

Third, the time to reach a consensus is short, and if the network environment is good, millisecond-level speed can be achieved.

There are two disadvantages of PoS. One is that the holding of coins tends to be centralized, because the more coins you hold, the longer the time, the greater the distribution of income, and the more coins you get, which makes the coins too concentrated; the other is liquidity If it becomes worse, there will be income distribution for holding coins, so there is no motivation to cash out, and the coins will not move, and the lying earning mode will be activated, resulting in poor liquidity of the coins.

DPoS Delegated Proof of Stake Mechanism

The DPoS delegated proof-of-stake mechanism is optimized on the basis of PoS. Through voting, producers are elected to fulfill their rights and obligations on their behalf, rather than using computing power to decide.

Producers can be voted out at any time if they are incompetent. The weight of voting and the distribution of income are calculated according to the percentage of the total amount of cryptocurrencies held, and the voting results of 51% of shareholders are irreversible and binding.

DPoS is similar to a joint-stock company. Ordinary shareholders cannot join the board of directors. They must vote to elect representatives to form the board of directors, use the digital currency in each person's hands to calculate the weight, and then vote to elect people who can represent their rights and interests according to the weight.

The advantages of DPoS are that the number of accounting nodes is small, the collaboration is efficient, and the accounting efficiency is high. The disadvantage is that the degree of decentralization is weakened, and the selected representatives conduct bookkeeping, and there is a certain degree of centralized control.

Epilogue

At present, no consensus mechanism is perfect, and each has its own shortcomings. With the continuous development of blockchain technology, the consensus mechanism will continue to be optimized, and the future can be expected. (Ethereum, POW consensus mechanism, POS consensus mechanism)