A Guide to Consensus Algorithms on Blockchain Networks Part 16

An example of proof of authority consensus. POA Network.


The notaries on the POA network implement the proof of authority consensus by verifying the identities of new members with the help of distributed apps.

The notaries themselves have been verifies and have their identities available for anyone’s inspection in the public domain. The database of notaries and the distributed apps are independent entities, meaning that it is not possible to verify a fake identity because in any scenario of a fraud there will be a mismatch in the database data.

In case an attacker managed to steal an identity and become a validator on the network pretending to be someone else, the fact that the data about identity is freely available in the public domain would quickly expose the attacker. One malicious actor on the network does not have sufficient power to cause problems to the entire network, and concerned parties can easily cross-check the documents using independent databases.

Eligibility on the network is hard to obtain because to become a validator, a party needs to pass a notary exam. This can only happen when a party does not have a criminal record, has good moral character and is committed to becoming a validator on the network.

On the POA network, having a notary license does not give anybody any authority automatically. It also does not mean that notaries are in some way, shape or form better than other members of the network. It is simply a way for the POA blockchain to allow users stake their identities in the same exact manner for every user, which allows the network to have explicit transparent rules that every validator has to comply with. Also, because this way is about obtaining notary certification, all validators become concerned with their reputation and good standing. On a proof of stake or proof of work network it is possible to lose the status of a miner/validator and regain it easily. On a proof of work network such as blockchain it is about buying hardware and having access to electricity. On a proof of stake network, a party can sell the coins and lose the validator status and then easily buy the coins and gain validator status. On a network like POA, if a party were to lose notary certification, gaining it back would be a complex and long process that it much harder than simply buying coins or hardware.


Proof of Weight Consensus Algorithms

Proof of weight algorithms are based on the same idea as proof of stake, meaning that in order to become a validator of blocks on a blockchain network a party needs to have a stake in the network. The difference between proof of stake and proof of weight is that in proof of stake the stake is financial and proof of weight algorithms measure stakes in a different way. For example, a proof-of-weight algorithm may measure the size of storage that users on the platform are contributing.


Tangle consensus

Strictly speaking, tangle is not a blockchain consensus because tangle networks are very different from regular blockchains.

Blockchain networks process and record transactions one by one, sequentially. This is the reason why the capacity of the Bitcoin network is only between 3 to 7 transactions per second. This is also the reason for the existence of Bitcoin Cash, which tried to solve the scalability issue of Bitcoin by increasing the size of the block and the Lighting Network, which keeps some transactions off the main blockchain so that the scalability stops being an issue.

With Tangle, a network can be processing transactions not one by one, but simultaneously.

One of the networks that uses Tangle is IOTA, which is different from many other blockchain networks in that transactions on the network are free.

To accomplish this, IOTA requires every user sending funds out to confirm two transactions on the network. This means that the bigger the network becomes and the more users it has, the faster it will be processing transactions. Here’s how this works. Let’s say the network has two users and user 1 wants to send funds to user 2. To do so, user 1 needs to confirm two more transactions, which means that there’s a confirmation opening and the network could accept more users without getting congested. If it gets two more users and one of them want to send funds to the other one, then the number of transactions that users are looking to confirm would also double, and so on. For this reason, scalability as an issue do not exist on IOTA.