An overview of alternative consensus mechanisms

One of the most important features that go into a blockchain protocol is the mechanism that determines who is the next block producer. Common algorithms for this include Proof of Work, which Bitcoin and Ethereum use currently, and Proof of Stake, which will be utilized by Ethereum 2.0. These procedures add difficulty to being a block miner so that it is non-trivial for nodes to produce blocks and dictate the ledger of the network. In other words, these two mechanisms are used to ensure that, either via computational power spent or wealth staked in the network, it is not easy to execute a Sybil attack.

However, there is no such thing as the perfect consensus mechanism. Proof of Work is often criticized for its high energy consumption and low throughput, and while Proof of Stake is more energy-efficient, there is some contention over its “rich get richer” nature. The issues with the two most prominent techniques for consensus have led to the development of many other ways to pick a node to make a block and for the network to reach agreement, which improves upon speed, fairness, and other factors.