Consensus Mechanisms Flashcards

What is the primary goal of consensus mechanisms in blockchain?

Answer: Achieve agreement among nodes

The primary goal of consensus mechanisms in blockchain is to achieve agreement among all participating nodes regarding the validity of transactions and the order of blocks. In a decentralized network, these mechanisms ensure that a single, consistent version of the ledger is maintained, preventing double-spending and maintaining trust without a central authority.

Which consensus algorithm is used by Bitcoin?

Answer: Proof of Work

Bitcoin, the first and most well-known cryptocurrency, utilizes the Proof of Work (PoW) consensus algorithm. In PoW, miners compete to solve a complex computational puzzle to validate transactions and add new blocks to the blockchain. The first miner to find the solution earns the right to add the block and receive a reward.

Which of the following is a drawback of Proof of Work?

Answer: High energy consumption

A significant drawback of Proof of Work (PoW) consensus mechanisms, as used by Bitcoin, is their high energy consumption. Miners expend vast amounts of computational power to solve cryptographic puzzles, leading to substantial electricity usage and environmental concerns. This energy expenditure is necessary to secure the network but comes at a considerable cost.

What is a key feature of Proof of Stake?

Answer: Validator chosen by staked coins

In Proof of Stake (PoS) consensus mechanisms, validators are chosen to create new blocks based on the amount of cryptocurrency they have 'staked' or locked up as collateral. The more coins a participant stakes, the higher their chance of being selected to validate transactions and earn rewards. This mechanism aims to be more energy-efficient than Proof of Work.

Which consensus method uses a reputation system for validator selection?

Answer: Proof of Authority

Proof of Authority (PoA) is a consensus mechanism where validators are pre-approved and known entities. Their identity and reputation are critical for their selection and ability to validate transactions. This system relies on trust in these authorized participants, making reputation a core component of validator selection.

Which blockchain consensus mechanism is designed for scalability and speed?

Answer: Delegated Proof of Stake

Delegated Proof of Stake (DPoS) enhances scalability and speed by allowing token holders to elect a limited number of delegates to validate transactions and create blocks. This streamlined process, with fewer participants involved in consensus, significantly reduces block confirmation times and increases transaction throughput compared to other mechanisms like Proof of Work.