BLOCKCHAIN

# C O N S E N S U S

Consensus Mechanisms M E C H AN I S M S

# P B F T # P O W # P O S

EXPLAINER

Consensus Mechanisms are the rules by which a network agrees to the

validity of transactions. The process ensures participants process the
same set of transactions in the same order on the blockchain.

D i f f e r e n t Ty p e s o f C o n s e n s u s
P r a c t i c a l B y z a n t i n e F a u l t To l e r a n c e ( P B F T )
• Participants or nodes in a network sign off on a transaction by executing the chaincode correctly
• Consensus that a transaction is valid is reached once a certain number of identical responses is
reached
• Works best for permissioned blockchains
• Used on Hyperledger Fabric v1
Pros:
• Tolerant of a failure by a minority of nodes, which is a strength for permissioned networks
Cons:
• Failure of more than 1/3 of nodes can result in a lack of consensus and transactions not being
executed
• This method is only viable for permissioned blockchains

Proof of Work (PoW)

• In order to change a record on a blockchain, you must redo the proof of work, a complex computational
task that requires an arbitrary amount of computing power
• You receive a fee as a reward for exerting this power
• Used on Bitcoin blockchain, and Ethereum Homestead release (Ethash)
Pros:
• Requires a lot of computing power to attack
Cons:
• This is an expensive solution resource-wise, in that it requires a lot of computing power
• This method has a limited scale

Proof of Stake (PoS)

• Consensus is determined on valid peers agreeing
• Agreement is determined by a participants reputation or stake in the system / network
• Used on PPCoin
Pros:
• Participants are accountable for their own actions
• Participants ability to make future validations or changes requires trustworthy reputation in the
system, which incentivizes good behavior
Cons:
• Difficult to succeed in a public network
• Trust and reputation of the participants is necessary for validation

Sources: http://pmg.csail.mit.edu/papers/osdi99.pdf
http://www.gartner.com/document/3426425?ref=AutoReg
https://bytecoin.org/blog/proof-of-stake-proof-of-work-comparison
https://intelledger.github.io/introduction.html