Consensus Algorithms in Blockchain - GeeksforGeeks
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Currently, most public blockchain uses proof of work (PoW) and proof of stake (PoS) as consensus algorithms. Bitcoin, the most successful cryptocurrency based on PoW, demonstrates the stability and fairness of the PoW algorithm. However, bitcoin was criticized for its energy-intensive mining activity. Billions of Dollars are invested in performing the calculations of SHA256 to maintain the network, besides that, limited applications are involved in this activity. Also, the current transaction speed of bitcoin is only 6 TPS, which cannot satisfy the scalability and high-throughput demands of a public blockchain. @GXChainGlobal #GXChain #BitShares #Blockchanin #Consensus2019 #NYBlockchainWeek #buidlboston https://www.gxchain.org/en
Bitcoin vs Ethereum. Guide to Understanding Ethereum.
Bitcoin vs Ethereum. Guide to Understanding Ethereum.
I’m writing this predominantly for crypto-newbies. Newbies need to know the difference between Bitcoin and Ethereum. Sometimes we forget how confusing this space can be to new individuals.
What is Ethereum?
Ethereum is one of the largest cryptocurrencies to date. Created by Vitalik Buterin, it has a lot of distinct features that differentiate it from Bitcoin. Bitcoin was created to be a peer-to-peer digital currency and Ethereum was created to serve as a decentralized computer featuring smart contracts. Both are similar in that they utilize blockchain technology to facilitate transactions within the network. Ethereum though, allows for much more utility through the use of smart contracts.
What is a smart contract?
A smart contract is a digital contract which conditions are carried out automatically through self-enforcing logic. A basic example of a smart contract could be one that automatically pays your best friend X amount of money on his/her birthday. The functionality of if/then logic on a blockchain allows for decentralized applications (dapps) to be created and executed on the Ethereum network. This is why Ethereum is referred to as a decentralized computer. You can create your own dapp by learning the Ethereum program language Solidity, or you could use one of the thousands of already created dapps.
What is a decentralized application?
A decentralized application is a application (program) that that is not controlled by a single entity, but rather, by the peers within the network. This means no central authority has control over the program itself. Imagine if YouTube was not owned and controlled by Google, but rather, by everyone who is participating within the network. This means YouTube wouldn’t be able to arbitrarily decide which videos and users are suitable for the platform. This power would instead fall into the hands of the people. Side Note: There’s already decentralized version of YouTube called DTube which is built on the STEEM blockchain.
Technical Differences Between Bitcoin & Ethereum
Bitcoin vs Ethereum
Proof of Work
Proof of Stake (Soon)
The total supply of bitcoin is predetermined; there can never be more than 21 million bitcoins created. Ethereum on the other hand does not have a max supply. You can read Vitalik’s thoughts on this here.
Block Size vs Gas Limit
Ethereum doesn’t have a block size but rather a gas limit. Gas is a measure of the amount of computational work needed to execute a command on the network. The amount of gas needed will depend on the program you are trying to run -- similar to how much gas needed for your vehicle will depend on how far you wish to travel. Gas limit is how much you’re willing to pay for a transaction to be carried out. Gas price is the price at which you’re willing to pay per gas. Together those determine your transaction fee. TX Fee = Gas Limit * Gas Price Websites like EthGasStation take an average of previous transactions to show what the average gas price is. Use it for your own benefit
Ethereum’s block time is much faster than bitcoin’s. ~15s vs ~10min. This means transactions on the ethereum blockchain on average will be much faster than on bitcoin’s. This is also why it’s typically recommended to use ethereum instead of bitcoin when making cryptocurrency deposits into exchanges like Binance.
Bitcoin uses a consensus algorithm known as proof of work (PoW). Ethereum currently uses PoW, but near the end of 2018 ethereum will move to a proof of stake (PoS) algorithm known as Casper. This will initially be rolled out as a PoW and PoS hybrid where every 100th block is validated by PoS.
Understanding ERC-20 Tokens
ERC-20 is a set standard for tokens that are created on the Ethereum network. It was created to allow for interoperability between ethereum based tokens. There are tens of thousands of different ERC-20 tokens due to the free nature of anyone being able to create their own. You may have heard of some of the more popular ones including:
These are all essentially tokenized smart contracts.
Understanding Initial Coin Offerings (ICOs)
One of the most common uses cases for an ERC-20 token is to be used as a means to raise capital. These events are called ICOs or Initial Coin Offerings. ICOs are analogous to IPOs (Initial Public Offerings) in that, when an entrepreneur needs to raise capital to fund the business -- he/she asks venture capitalists for money. The venture capitalists in return ask for a stake in the company which is expected to increase in value over time. The difference is an ICO does this through crowdfunding by utilizing blockchain technology. Instead of purchasing stock in the company, you’re purchasing a cryptocurrency (which is often just a ERC-20 token). Then, if the project gains real world utility, the price of the token should increases in value. As you could imagine, because of the nature of how easy it is for anyone to create their own ERC-20 token, bad actors within the space have abused this power to launch fraudulent businesses which is funded through the sale of their token. The most notable example of this is probably BitConnect which promised 1% daily compounding interest with your investment. This of course was a scam, and BitConnect no longer exists. This is not to say there’s no such thing as a legitimate ICO (Ethereum was funded through an ICO after all), however, know that an overwhelming majority of ICOs are fraudulent with 80% being scams. As a newcomer to the cryptocurrency space, understand that there is a lot of fraudulent cryptocurrencies out there. The importance of DYOR (do your own research) can never be understated.
This post is starting to get pretty lengthy so I’m going to cut it here. By now you should have a good understanding of what ethereum is, why it’s important, and how it works. I’ve listed the most important takeaways below:
Ethereum was created by Vitalik Buterin
Ethereum is a decentralized computer featuring smart contracts
The Ethereum platform allows you to build decentralized applications (dapps)
Ethereum will transition to a proof of stake (pos) consensus algorithm
08-31 07:44 - 'The fundamental basis of the distributed consensus algorithm as it exists, is that all the entities in the network compete to use as much energy as possible. Power consumption is an issue, and will continue to be so. / The net...' by /u/mort96 removed from /r/Bitcoin within 489-499min
''' The fundamental basis of the distributed consensus algorithm as it exists, is that all the entities in the network compete to use as much energy as possible. Power consumption is an issue, and will continue to be so. The network processes just over 7 transactions per second max (unless either block size or block frequency grows, which provides its own challenges). Side chains will help, but the result of transactions on side chains must end up on the main chain. Having a small hard upper limit is scary. ''' Context Link Go1dfish undelete link unreddit undelete link Author: mort96
What are some applications of Blockchain technology in telecommunication?
Blockchain is one of the high potential technologies finding its way out every day on different platforms. Emerging blockchain applicationsare now utilizing and implementing the usefulness that blockchain has brought with it. Blockchain is an open-source decentralized technology that deals with the peer-to-peer data connection powered by consensus algorithms. Bitcoin is a first blockchain application which later expands to the new level of aspects. Industries like banking, healthcare, insurance, supply chain, telecommunication and more are efficiently using this new technology knowing its applicability and features. The key points of Blockchain technology are: Neutral and Transparent: Blockchain is a distributed network of ledgers that holds the user information. Every single network in the node carries a copy of the ledger with a complete decentralized approach. Higher Speed: Peer to peer transactions are performed on a better speed count, however, blockchain worked with that speed to resolve the issue. Greater Security: Blockchain ensures the network security of the peer’s identity, on the other hand, two-level security keys and encryption makes it more secure. How can Blockchain work in the telecommunication industry? Telecommunication is a vast industrial sector that conquers the greater part of the global capital but these days facing hard times due to the commoditization and to overcome it customer needs upgraded services. The telecommunication industry is on the verge of reformation as they are rapidly adapting digitalization and virtualization which has opens up future doors of opportunities for blockchain in the telecommunication sector. Telecom industry is facing the loss due to the fraudulence and to prevent this Blockchain securityledger can be used. Blockchain can help to verify the individual identity and can link devices to the identity on the network so, if an individual meets specific rules, then a smart contract can be executed to settle the costs. The managing identity will allow users to manage Id’s across applications, devices, and organizations with a single password with blockchain’s reliable and flawless schemes which verifies the identity in a digital presence. Blockchain is an excellent opportunity for Telecom sector to grow and spread their realm in a secure environment.
Dr. Nikolas Kokkalis: 1) When we launch mainet through the nodes, your coins will transfer to the pi mainet. 2) Your mobile phones DO NOT need to do any expensive computations or network traffic. 3) Pi is using a different consensus algorithm than bitcoin.
Every 210,000 blocks, or approximately once every four years, Bitcoin undergoes a halving event where the mining rewards are cut in half. The current block reward is 12.5 BTC/block, and the next halving is expected to take place on 12 May 2020. From block number 630,001, the block rewards will be reduced to 6.25 Bitcoin. This process is supposed to continue until the last Bitcoin has been mined. Halvings are done to preserve the value of Bitcoin through the laws of supply and demand. If Bitcoins are mined too quickly, and there is insufficient market demand, their value will drop. Historically, the halvings have always positively affected the price of Bitcoin in the months and years following the event when Bitcoin reached new all-time-highs.
What is Bitcoin Mining and How Does it Work?
Bitcoin is a decentralized currency. It doesn’t use the services of a bank or another central institution to transfer the assets. Instead, Bitcoin has a blockchain and its transaction records are stored for eternity. The people who store these transactions on the blockchain are called miners. Miners are financially incentivized to confirm transactions. The confirmations are done by solving complex computational problems. Whoever solves the problem receives a fixed reward in Bitcoin. Likewise, Bitcoin relies on a Proof-of-Work (PoW) consensus algorithm. It bets on the strength and efficiency of the underlying hardware. PoW coins are mostly mined through GPUs and ASIC miners. In the past, Bitcoin could be mined with your PC’s CPU. The mining network wasn’t big, and the rewards were appealing. That is no longer the case. The mining difficulty has increased and today, mining is handled via countless expensive ASIC miners. PoW mining is, therefore, profitable only to those who have made substantial hardware investments and not to the ordinary man. PoW consumes much electricity, and the Bitcoin network generates a block every 10 mins on average, which makes it more difficult for ordinary miners to get block rewards.
What is Proof of Formulation?
In the case of FLETA, it utilizes its own consensus algorithm: Proof-of-Formulation (PoF). This algorithm consists of 2 main actors:
Formulators — the block generators, the equivalent of PoW miners.
Observer Nodes — validate, confirm, and sign transactions in real-time, and prevent forks and double-spending.
In contrast to PoW, where better hardware equipment is equal to bigger rewards, in PoF, all Formulators take part in block generation according to a pre-determined order. Once everyone has had their turn, a new mining phase starts, and all Formulators are arranged according to a new random sequence. No competition and equal mining opportunities for everyone! To become a formulator, a user needs to register and stake 200,000 FLETA tokens at the FLETA Formulator Portal or FLETA Wallet. There is a maintenance fee to be paid every month. The mining is performed through FLETA cloud mining, and the user doesn’t need to set up a server on his own. Formulators can be upgraded for more efficiency and better performance. This is explained in more detail here.
Observers secure the network and prevent DDoS attacks. 5 Observers are assigned to each Formulator group. At least 3 of them are required to sign the transactions and include them in the blockchain. This system makes a fork impossible because the first block with three signatures will be included in the blockchain.
In the End
Proof-of-Formulation is fast, fair, and secure, thanks to the watchful eyes of the Observer Nodes, and their bond with Formulators. The results show that PoF allows 14,000 transactions/second and a block creation time of only 0.5 seconds/block.
2 March listed. Ethereum eRush is the first and the only coin that be mined by 'Proof of Live' consensus algorithm. #EthereumeRush #Bitcoin #blockchain #Cryptocurrrency #CryptoNews #sistemkoin #coinsbit For more info: https://t.co/1u5omI5voZ https://t.co/XkUFFeMRVE
Ethereum eRush is the first and the only coin that be mined by 'Proof of Live' consensus algorithm. #EthereumeRush #Bitcoin #blockchain #Cryptocurrrency #CryptoNews #sistemkoin #coinsbit For more info: https://t.co/1u5omI5voZ https://t.co/XkUFFeMRVE
If you are a modern society, you can find many examples of consensus algorithms. This project is what will give us the will and great opportunities! Come here. Join us! #RIDE #RideNodeTM #IEO #blockchain #crypto #bitcoin #ethereum
The first kind of consensus algorithm that we’ll be discussing is the Proof of Work (PoW) algorithm.Proof of work in Bitcoin (and other proof of work cryptocurrencies) function as a tool that is ... Consensus Methods . There are different methods of finding consensus in a blockchain: Proof-of-work: is the oldest consensus mechanism and was invented by Satoshi Nakamoto.It is currently used in Bitcoin, Litecoin and Ethereum among other cryptocurrencies. It is criticized for its high amount of energy consumption. Few chain implementing this consensus are Bitcoin, Ethereum, ZCash, LiteCoin. 2. Proof of Stake Due to the issues faced by the proof of work algorithm concerning the unnecessary wastage of electricity resources, there has been different effort to create new consensus algorithm that will be better and use less resources compare to proof of work. Um Bitcoin genauer zu verstehen, sollten auch andere Blockchain Konsensus Algorithmen betrachtet werden. Das Blockchain Trilemmer steht im Mittelpunkt dieser Diskussion um die Vor- und Nachteile der verschiedenen Modelle. For example: Bitcoin uses Proof of Work (PoW), which has high levels of decentralization and security, but scalability is limited. Depending on the consensus protocol you choose, you can alter the balance of these three properties to maximize your desired outcome. Each mechanism has the same goal of reaching consensus in the network, but they go about it in very different ways. View the full ...
This video is about consensus algorithms used in Blockchain! Like, Share, Subscribe... Consensus in Bitcoin - Bitcoin and Cryptocurrency Technologies Part 7- Community, Politics, and Regulation We'll look at all the ways that the world of Bitco... L13: Bitcoin Blockchain Consensus - Duration: 19:57. Distributed Systems Course 1,470 views. 19:57 . The future will be decentralized Charles Hoskinson TEDxBermuda - Duration: 13:36. TEDx ... Consensus and Mining on the Blockchain - https://blockgeeks.com/ What is consensus on the blockchain? Consensus basically means that all nodes in a decentral... Proof of Work Proof of Stake