Proof of What?? Consensus Protocols Explained

Proof of Work was first created to combat junk email in 1993, but just like many other consensus algorithms, it has taken on a second life within the world of cryptocurrency mining.

You’ve probably heard of one of the consensus algorithms: Proof of Stake, Proof of Work, Proof of Weight, etc., the list goes on. They might all blend in together at this point. You look them up, but the next time you see them used in an article, you forget what they mean. It can be hard keeping it all together. After all, it seems like a new consensus algorithm comes up every other day. And it’s not like we’re talking about lunch here … these are complicated computer science algorithms.

Lots of questions seem to surface about these algorithms: what exactly is a consensus algorithm and why are they so important to the mining process of cryptocurrencies? Why does each cryptocurrency need to have a different consensus algorithm? Which consensus algorithm is the best?

With all of the emerging terminology, it’s hard (if not impossible) to remember the function for each one. The following article has some tips, tricks, and charts for remembering these algorithms. It will leave you in a better position to understand the differences between some of the biggest consensus algorithms. After reading this article, you’ll better understand how blockchain mining works.

What is a Consensus Algorithm?

You may have started to realize that a computer is built in a similar way to how a brain is compartmentalized. In the age of AI, that isn’t too hard to grasp.

Similar to a human brain, systems of computers can have a hard time arriving at an agreement, especially if the consensus needs to be achieved with other computers that are not very similar. For blockchain, any information that is added to a block must be agreed upon by the parties involved. This means that both a computer and a human user (or group of human users) must also agree. A consensus algorithm is the mechanism through which that agreement is achieved.

For example, once a transaction is initiated in the Proof of Work (PoW) consensus algorithm, data from the transaction is replicated across multiple computers (or nodes) on the network. The nodes verify the legitimacy of all of the transactions on a block. To do this, the miners must compete to solve a complex computer problem which is known as the PoW problem. The first miner to solve the problem gets rewarded with coins. Once the block is verified, it is added to the blockchain.

*How to Remember* You can remember the PoW algorithm because of the term “work.” The first miner to solve the Proof of Work problem can do so because of brute force, or through the sheer amount of work their computer can do.

Remember, PoW is just one type of consensus algorithm. While it might be the most ubiquitous right now, it is only one way of solving a problem.

Proof of Work versus Proof of Stake

A second consensus algorithm that is widely known is called the Proof of Stake (PoS). Remember how the Proof of Work used the PoW problem in order to choose who will validate the block? In PoS, it’s a little different—the selection of the verifier is based on how many coins that a miner holds. If two miners are competing for the same block, one miner with ten tokens, the other with 50 tokens, in PoS, the miner with 50 tokens would be five times more likely to be chosen as the block validator.

There are two advantages that Proof of Stake is thought to have over Proof of Work. For one, PoS is often considered to be much greener. Due to the sheer brute force of the work that is required in Proof of Work, a large amount of energy is required to become the fastest miner to solve the PoW problem. The required energy represents real costs and takes a toll on the environment.

The second advantage that PoS has over PoW is that a miner has to support and hold the currency of the coin. In PoW, a miner could potentially have 0 coins as long as they validate the block the fastest. However, in PoS, the validator must have the largest number of coins. It requires the validator to have the coins.’s Proof of Delivery

The Protocol uses a form of PoS called Delegated Proof of Stakes in addition to a now-developing algorithm known as Proof of Delivery. Through the groundbreaking tandem use of these algorithms, individuals can rent extra space in their homes to use as a storage facility. This allows individuals to become delivery points for’s hyperlocal distribution blockchain. Individual houses and commercial spaces become storage facilities by staking tokens. The token staking acts almost like collateral.

Imagine being able to rent the extra space in your house and use it as a storage facility?

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Other Consensus Algorithms

While there are at least dozens if not hundreds of different consensus algorithms, the ones that are used the most and spoken about the widest are PoS and PoW (that is why they were chosen as the subject of this article). The above chart briefly illustrates some of the notorious consensus algorithms, including those previously mentioned.

In Closing

It can be easy for some people to tell you which consensus algorithm is the best, but in reality, this technology is still relatively new. Yes, Proof of Work was created 25 years ago, but it is still new as far as how it is used in blockchain. When distinguishing between PoS and PoW, focus on the words stake and work. The more energy you put into solving the problem the fastest, the higher your likelihood of winning. On the other hand, PoS systems like rely on the greener PoS. When remembering PoS, it’s the amount of the stake of tokens that a miner has which will allow them to win the block validation.

To dig a little deeper, check out the following articles which were used as references:

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Joe Riviello -Chief Operating Officer- As a technology development and marketing expert, Joe creates engaging, conversion-centric e-commerce experiences and cutting-edge solutions that maximize growth and profit. Joe is the founder of Zen Design Firm, LLC, a 10 year old web development and marketing company designated by e-commerce giant, WooCommerce, as one of just a handful of experts in development on the WooCommerce framework. Joe also serves on the Board of Directors for the Northeastern Economic Development Company and has advised multiple Fortune 500 companies on strategic growth initiatives with a specialization in digital marketing channels.

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