Consensus Algorithms for Blockchain

Abstract

A consensus algorithm is an essential component of a blockchain, responsible for reaching an agreement among decentralized nodes. It also determines the performance and characteristics of an application. With more than 2,000 different cryptocurrencies currently in use, we face an ever-growing list of consensus algorithms. Furthermore, the inherent complexity of consensus algorithms and their rapid evolutions make it hard to assess their suitability for blockchain applications. Understanding the pros and cons of a consensus algorithm is crucial in designing new blockchain services and developing more advanced algorithms. We propose a framework with comprehensive criteria to evaluate consensus algorithms in terms of performance, security, and decentralization. In addition, we present the operational mechanisms and analyze the characteristics of mainstream consensus algorithms, namely, proof-based algorithms such as Proof of Work (PoW) and Proof of Stake (PoS), and vote-based algorithms with Byzantine Fault Tolerance (BFT). The algorithms are evaluated based on our proposed framework to provide a better understanding. We hope this article leads us to identify research challenges and opportunities of consensus algorithms.