Blockchain Consensus Algorithms

Published by : Pankaj | Jun-23-2022

Consensus Algorithms

  • Blockchain development has transformed multiple industries and is now unstoppable. The distributed decentralized network of Blockchain provides immutability, privacy, security, and transparency. Also, there is no involvement of a central authority to verify and validate the transaction, which makes every transaction completely secured and verified. It is possible due to the presence of a consensus algorithm protocol that acts as an integral part of any blockchain.

    What is Consensus Algorithm?

    The Consensus Algorithm is a system used to validate the transaction authenticity and maintain underlying blockchain security. It is for the cryptocurrencies like Bitcoin and Ethereum. Also, the system ensures the recording of all legitimate transactions is on the blockchain. Each copy of the blockchain incorporates all valid transactions.

    The working principles of Bitcoin and other cryptocurrencies will let you know the role of the consensus algorithm.

    Why Is the Consensus Algorithm Important?

    With the use of a consensus algorithm, every cryptocurrency blockchain operates. Also, to agree on the legitimacy of transactions, then it is a system that blockchain network user follows. The transaction records are on the blockchain, once there is a validation of the transaction.

    Moreover, for the blockchain network, a consensus algorithm is very crucial. It influences the verification of the transactions, amount of energy needed, network fees, transaction speed, and other detail for the currency and network applications. Also, each cryptocurrency blockchain may use its unique consensus algorithm or existing blockchain copy.

    Also, read: Understanding the Blockchain and Decentralized Consensus

    Pros and Cons of Consensus Algorithm

    The enclosing of the consensus algorithm is the next block to be the blockchain. It also secures the blockchain network from wrong rogue nodes interfering, tampering, or hindering. Also, we can say a consensus algorithm is the backbone of blockchain, but everything has its Pros and Cons. Let’s take a look.


    Forms agreement foundational to the crypto-market

    Between all participating users, consensus algorithms synchronize data and enable trust in a blockchain.

    Build a secure environment

    For security purposes, cryptocurrencies, and distributed applications rely on a consensus mechanism.

    Anyone can participate

    Barriers to taking part as a miner or operating their nodes are not very high with the most popular consensus algorithm.


    Maybe energy-intensive

    The energy requirement of proof-of-work is very high and requires as much power as many countries.

    Potential for attacks

    With a consensus algorithm, there is some chance for a hack called a 51% attack, among other weaknesses. Thereby it is making decentralization a failure.

    Impact of Consensus Algorithm on Throughput

    Throughput is the consensus algorithm that determines the security level, transaction speed, and network scalability. Also, permissionless blockchain proof-of-work (PoW), and proof-of-stake (PoS) are the most commonly used consensus algorithms. Also, for the enterprise blockchain, the Crash Fault Tolerant protocol is being used and comes with its own set of challenges.

    Crash Fault Tolerant

    There is a number of threats distributed system faces, the process may crash, the device fails, or the network connection may stop at some location. The consensus algorithm has flexibility against a variety of threats for enterprises.

    Crash Fault Tolerant (CFT) develops flexibility in the protocol that can correctly take the algorithm process ahead and reach consensus. CFT is the best solution if the system fails. If any entity acts maliciously, CFT is unable to reach a consensus.

    Byzantine Fault Tolerance

    It is a consensus algorithm that is not only able to tolerate failure but also withstand corrupted data and malicious attacks. Byzantine Fault Tolerance (BTF) ensures that each node receives the same guaranteed data. There is confirmation of consensus consistency if two-thirds of the nodes are safe. Using BTF, no single failure or uncoordinated can impact consensus.

    Although the traditional BFT technique provides high availability and security but was fail in ensuring high throughput.

    Solution for Throughput

    Following considerable examination of existing blockchain solutions, we designed an enterprise blockchain solution to address drawbacks like scalability, throughput, and security. We develop fastBTF to overcome the vulnerabilities and limitations of other blockchains by focusing on three sectors.

    FastBFT is a novel BFT that is both fast and scalable. Its basis is on message aggregation technique that combines hardware-based trusted execution with lightweight secret sharing.

    FastBFT only needs a subset of nodes to run the protocol. These all features make FastBFT ideal for next-generation blockchain.

    Limitation of Consensus algorithms

    Proof-of-work (PoW)

    Proof-of-work (PoW) was the first consensus algorithm and is the one used by Bitcoin. It works on a public blockchain, and several other cryptocurrencies use it.

    Moreover, the drawback of PoW is that it is energy-intensive, costly, and requires plenty of computing power. It is vulnerable to the notorious 51% attack-making decentralization a failure.

    Proof-of-stake (PoS)

    The consensus algorithm introduced to overcome the drawback of PoW is proof-of-stake (PoS). It is also designed on a public blockchain and has higher speed, lesser energy consumption, and lesser hardware requirement.

    Moreover, the drawback of PoS is that it is also vulnerable to reducing system decentralization. The basis of PoS is on rich get richer syndrome which means only the richer have control over consensus. There are many variations of PoS, but DPoS is the most popular one.


    The DPoS consensus algorithm has slight variation but is similar to PoS. It offers all the advantages of PoS but has few other benefits, such as better reward distribution and secure real-time voting.

    Moreover, the drawback of DPoS is Cartel formation, Vulnerability, and centralized.

    These three are the most common consensus algorithm, and several other protocols are coming up to overcome the drawback of above listed three consensus algorithms.

    Proof of Capacity (PoC)

    Leased Proof of stake (LPoS)

    Proof of Elapsed Time (PoET)

    Proof of Activity (PoA)

    Practical Byzantine Fault Tolerance (PBFT)

    Proof of Importance (PoI)

    Proof of Burn (PoB)

    Also, read: Public and Private Blockchain | an Analogy to Help You Choose the Best

    Which one should you choose?

    The fact tells that no single consensus protocol that works for all. It depends upon several factors like blockchain type, project scale, performance requirement, token, application type, and more to choose the right algorithm.


    The goal of all these consensus algorithms is to become a decentralized network. Although, even after a shared goal, these algorithms are diverse in approach. There is much more to come in consensus algorithm because the ideal consensus doesn’t exist yet.

    If you are planning to utilize these blockchain consensus mechanisms, then we are the right choice for you. We have an expert team of blockchain developers that deliver the best blockchain solution.

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