Crypto Comics - What is Consensus

I shared my thoughts about Consensus.

TL;DR

I shared what consensus is and how to use it in the crypto space.

Some Takeaway

A consensus is a process to reach an agreement. Rather than a centralized organization in which one or few makes the consensus agreement, a decentralization organization involves every participant to join the process of consensus. How consensus works may vary from type of mechanism, but the goal is the same at the end to reach an agreement.      

Consensus Through Competition      

Proof of Work is a way to reach consensus through competition. An algorithm to make computers work to find solutions and to compete between and to receive incentives. Such design is to make a fair game for participants to join and to receive a fair share. Only the problem is that participants can invest in their gears and outpaced their competitors. In such a way, it brings up the bar of the game and quickly games out the competitors. Otherwise, PoW still works through a consensus way to reach an agreement through a competition.  

Consensus Through Power

Proof of Stake is a way to reach a consensus through each participant’s stake or power. The way is to try to distribute fairness to everyone to participate. But at the same time, the more stake one controls, the more likely one receives more incentives. Consensus works for whoever has a more stake rather than the fewer stake participants.

Consensus Through Reduction

Proof of Burn is a way to reach a consensus through reduction of the supply. Such short-term reduction boosts the long-term promise returns for participants. This works only if one fairly reduces their shares in the system. Such consensus is harder to balance since everyone is unwilling to reduce their stake because they want to gain from the system eventually. 

More Ways of Consensus

There are many other ways to design a consensus. The goal is to be sustainable in the decentralized system without sacrificing too much on its security and scalability. How to balance these 3 factors is an art rather than science for each creator to discover.  

Why Consensus

Since there is no centralized party to oversee the system, bad actors will always try to gain from the system. To prevent but not to discourage participants, the consensus is a way to involve everyone to reach a balance of agreement that suppose everyone will agree. In reality, it is harder to reach a consensus as it sounds it will. To rule out the odd that someone will damage the system, two-thirds of the number must agree on the consensus as known of the Byzantine Generals’ problem. Such game theory guarantees the security of the system and makes sure such a system is working properly. 

In conclusion

Consensus is a process to reach an agreement in the decentralized system. To ensure the system will work properly, the consensus must make sure two-thirds of the participants agree on one and others without jeopardizing the security of such a system. 

Photo by Joakim Honkasalo on Unsplash

Resources

1. https://www.investopedia.com/terms/c/consensus-mechanism-cryptocurrency.asp

2. https://coinmarketcap.com/alexandria/glossary/consensus

3. https://www.geeksforgeeks.org/consensus-algorithms-in-blockchain/

4. https://xrpl.org/intro-to-consensus.html