The number of smart contract blockchain platforms is growing fast. These platforms use algorithms (a set of rules for accomplishing a task in a certain number of steps) to reach a consensus (a generally accepted opinion or decision among a group of people) on the blockchain. Consensus algorithms therefore are a vital part of blockchain technology. Although many of these platforms use the same few types of consensus algorithms, about half of them use their own algorithm unique to their platform/blockchain.
On August 29, 2018 BlockTest collected data concerning 35 blockchain platforms which have had ICO tokens released on their blockchain. We have confirmed about 30 additional blockchain platforms that are not included as part of this data because our data shows no ICOs associated with their blockchain. In total, 35 platforms and 18 protocols are considered in the following chart.
About one half of the platforms use either proof of stake (PoS), distributed proof of stake (dPoS), or proof of work (PoW) algorithms. The other half of the platform use instances are divided almost evenly among platforms with just about every other consensus algorithm being used by only 1 platform (with the exception of the practical byzantine fault tolerance (PBFT) being used by 2 platforms).
Proof of Stake
The proof of stake (PoS) algorithm is currently the most used consensus algorithm among platforms which have had ICO tokens released on them. This consensus algorithm is the algorithm of choice for 10 (28.57 percent) of the 35 platform uses. The PoS concept states that a person can mine or validate block transactions according to how many coins he or she holds. This means that the more of a platform’s cryptocurrency tokens/coins owned by a miner, the more mining power he or she has on that platform’s blockchain. This gives reward incentive to investors/miners to hold coins rather than trade them.
Proof of Work
The second most used consensus algorithm, used by 5 (14.29 percent) of the platforms, is proof of work (PoW). PoW is the validation of the “work” that has happened and “proving” it is correct. Bitcoin and many altcoins have adopted this way of consensus to ensure the authenticity of the chain. In the simplest of terms, it can be explained: “put in work, get something in return.”
Delegated Proof of Stake
Following PoW is the delegated proof of stake (dPoS) algorithm, currently used by 4 (11.43 percent) of the platforms. The main difference between DPoS and PoS concepts is that in a DPoS consensus system, community members have more governance rights in the network. To put it simply—just like in a democracy, people involved in a dPoS consensus algorithm can vote for people who will mine the coins. People with more coins have a bigger vote, so instead of everybody being able to mine for themselves, voters can now choose exactly which people will be able to mine.
The Other Half
There are 15 remaining consensus algorithms used by 16 (45.7 percent) of the platforms which have released ICO tokens. These consensus algorithm concepts were mostly invented and implemented by the teams working on each associated platform.
All consensus algorithms have their own pros and cons, and none of them are perfect. Hence why we keep seeing new algorithms appear, such as Byzantine Fault Tolerance-oriented mechanisms and entirely new consensus algorithms that aren’t even associated with a blockchain.
So what’s your opinion? Do you think one of these 18 consensus algorithms is better than the rest? If so, which one, and why? Let us know what you think in the comments!
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