Consensus Mechanism In Cryptocurrency.

Introduction.

Cryptocurrency like I always say is a wide ocean and today we have the consensus mechanism, all thanks to our teacher @fredquantum. I will be sharing the little I learnt from the class.

What is your understanding of Consensus Mechanism in Crypto Ecosystem? Briefly talk about the Proof of Work (PoW) and Proof of Stake (PoS) Consensus mechanisms.

The consensus Mechanism are known to play a vital role in the Cryptocurrency ecosystem. These Mechanism are said to be connected processors which validates and checks the accuracy of a transaction carried out on a blockchain. Before any transaction is added to the blockchain, the Consensus Mechanism first of all confirms the legitimacy of the transaction. Transactions are first of all confirmed before they are added to the blockchain.

Proof Of work

Proof Of Work is said to be a Decentralized Consensus Mechanism, therefore Proof Of Work can be defined as the process of attaching new transaction blocks to the blockchain of any digital currency. The miners generate hash in relation to the hash of the preceding block. For every block successfully added to the blockchain, the miners get rewarded for that. Proof Of Work was the first consensus Mechanism used on the Cryptocurrency ecosystem.

Proof Of Stake

This is another type of consensus Mechanism which plays a vital part in verifying transactions in the Cryptocurrency ecosystem. With these nodes of the proof Of Stake, Cryptocurrency holders are given room to stake their digital currencies, staking their coins enables them to verify transactions of new blocks before adding them to the blockchain. The more you stake, the more power you get, simply coin owners who staked their coins become validators automatically.

What are the distinctive differences between Proof of Work and Proof of Stake? State and discuss at least other two types of Consensus Mechanisms.

Both POS and POW all verify new blocks before adding them to the blockchain but still different from each other.

Proof Of Stake	Proof Of Work
Owners who staked their coins become validators.	Validators are selected randomly and not because they staked their coins.
Validators do not receive any block reward, but takes network fees as reward	Receives block rewards.
Systems are expensive and consumes a lot of energy.	Systems are less expensive and consumes lesser amount of
Miners do not compete to add a block to the blockchain but are chosen to add blocks to the blockchain depending on their stake.	Miners compete to add new blocks to the blockchain, miners are expected to provide solution to puzzles.

DPOS (Delegated Proof of Stake)

The DPOS is a lot more similar to the POS but on the other hand with the DPOS, digital currency owners, use their stake to make a register if nodes that will be permitted to add new blocks of transaction to the blockchain. DPOS offers every coin owner more control on the network.