Introduction
Blockchain networks have been heralded as the future of commerce, but their widespread adoption hasn’t happened yet. The main reason for that is that blockchain networks are still a work in progress, and many people still don’t trust them. However, increasing confidence in these networks can be achieved with trusted consensus algorithms and proof-of-work systems.
The Need for Trusted Consensus in Blockchain Networks
Blockchain networks require trustless consensus. This means that a blockchain network must be able to operate without an intermediary and maintain its integrity without requiring trust in any individual or group of participants.
Blockchain networks also need to be scalable, or able to grow their capacity as the number of transactions increases over time. This is because blockchains are typically used for financial transactions, which can generate high volumes at peak times (such as during trading hours). The challenge of scaling blockchain networks is that there are often limits on both the throughput rate (the number of transactions per second) and storage capacity available in each node within an instance of the network; adding more nodes doesn’t necessarily help improve either metric because they share these same limitations with one another as well
The Challenge of Scaling Blockchain Networks
Blockchain networks are secure, decentralized and efficient. They have the potential to be scalable as well, but there are challenges that must be overcome before this can happen.
Different Approaches to Blockchain Scaling
- Proof of Stake (PoS): In a PoS system, miners are selected based on their stake in the network. For example, if you own 10{6f258d09c8f40db517fd593714b0f1e1849617172a4381e4955c3e4e87edc1af} of all tokens and want to mine a block, your odds are 10 times higher than someone who owns 1{6f258d09c8f40db517fd593714b0f1e1849617172a4381e4955c3e4e87edc1af} of all tokens. This reduces centralization because it’s easier to acquire large stakes than it is for one person or group to hold 51{6f258d09c8f40db517fd593714b0f1e1849617172a4381e4955c3e4e87edc1af}.
- Delegated Proof-of-Stake (DPOS): In this approach, each node chooses a few other nodes as representatives; these representatives then form consensus about which transactions should be added next during each cycle (or epoch). Nodes can also vote out other delegates if they don’t approve of their performance in some way–for example by not being active enough or making bad decisions about which blocks should be added next. This makes it possible for anyone who owns some amount of cryptocurrency on any given blockchain using DPOS consensus algorithms like Lisk’s DPoS system or Steemit’s STEEM token ecosystem
Improving Confidence in Blockchain Networks with Proof of Work
- Proof of work is a system that requires some work from the service requester, usually meaning processing time by a computer. In cryptocurrency mining, for example, it could be finding solutions to complicated math problems and being rewarded for it.
- Proof of stake is another system that requires something from the service requester, but instead of processing time (which is what “work” means in this context), it’s money. With proof-of-stake cryptocurrencies like Ethereum or Cardano you have to put up some amount of currency as collateral against abuse before you can use their network; if you try anything funny with them they’ll take away your money!
Confidence in decentralized systems can be improved with proof-of-work and consensus algorithms.
Proof of work is a mechanism for achieving consensus in decentralized systems.
It’s also used to achieve consensus in blockchain networks, like Bitcoin.
Conclusion
A blockchain network can be trusted if it uses a proof-of-work algorithm and consensus mechanism to ensure that transactions are valid. This type of system ensures that all nodes in the network agree on which transactions are valid and which ones aren’t, so users don’t have to worry about malicious actors attacking their funds or interfering with their use of an application built on top of a blockchain.
