Consensus Algorithms in Blockchain

By Prashant Jha

Blockchain networks are known for being incredibly decentralized. They also allow for the recording and monitoring of absolutely accurate information. This is what makes the technology so useful and important, especially when we apply blockchain in supply chain, or we extend the use of this technology to healthcare or more. These are areas that require factually accurate information to be traced over a time period. The ability of blockchain to do this gives it an immense potential for making sure that people pay for what they actually get, and that drug and food safety is maintained while the medicinal or food products are moved from one point in the supply chain or other. Now, how is such efficiency maintained at the same time as being decentralized? Well, that’s where consensus algorithms come in.

Now, blockchain is a distributed digital ledger system that is spread across several “nodes” or member computers, to put it simply. There is no central authority that streamlines the operations of this ledger, but it still remains updated with the information of all the latest transactions, that have been verified and validated. This is ensured by having a consensus algorithm in place. Now peer-to-peer currencies that came before Bitcoin failed to survive because they did not know their way around the Byzantine Generals Problem where generals from the large Byzantine Empire cannot attack a city because they need to concur on a unanimous decision but the distance between them makes that an impossibility.

A consensus algorithm helps blockchain networks work a way around this problem and serves as a process in which principles of computer science are implemented to make sure every single node agrees on every single data value that goes up on the network. When there are several unreliable nodes, there should be some way to ensure the reliability of information that becomes a part of the ledger. This is a crucial aspect of distributed computing, an example of which is blockchain, and helps reconcile different perspectives in a system with multiple stakeholders. Consensus algorithms must, and does also take into account that all communications about a particular transaction might not survive entirely. Some systems and processes connected to the information might also have become unavailable. This is why, fault-tolerance is an important aspect of consensus algorithms. The typical assumption is that not all nodes can respond, and only a certain number of them will be available for validating the transaction. 51% of nodes is a minimum requirement for valid consensus to be possible. Blockchain works as a P2P or a peer-to-peer system. Every single node or member maintains a copy of the ledger to make sure there can be no SPOF (single point of failure). All changes made in the ledger becomes visible to everyone who has a copy.

How can Consensus Algorithms be applied?

Consensus algorithms are used in taking decisions about the following aspects:

a) Whether or not a piece of information about a transaction is to be updated onto the ledger.
b) Electing delegate nodes for performing sort of a distributed task for the upkeep of the ledger.
c) Making sure all copies spread across node computers are completely consistent with one another.

Examples of using consensus algorithms in real-life situations include smart grids, synchronization of clocks, Google’s PageRank, drone control and load balancing. There are many different consensus protocols used in blockchain, that try to solve this same problem in different ways.

Prashant Jha

As a content writer Prashant believes in presenting complex topics in simple laymen terms. He is a tech enthusiast and an avid reader.

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