Other Consensus Mechanisms in Cryptocurrencies

In addition to the Proof-of-Work (PoW) and Proof-of-Stake (PoS) consensus algorithms mentioned in the previous article, there are other consensus mechanisms with their own functions. Let’s take a look at some of them and find out their strong points.

Proof of Activity

Proof-of-Activity is a standard hybrid that combines PoW and PoS. PoW blocks are generated together with PoS blocks, meaning that the blockchain consists of blocks of both kinds. PoW miners generate a block first, then PoS holders finalise it. For example, both PoW and PoS methods are applied in such cryptocurrencies as YaCoin, NovaCoin, EmerCoin. In Reddcoin and PeerCoin, PoW is used for initial coin issuance, and then PoS is used for block confirmation.

Delegated Proof of Stake

Delegated Proof-of-Stake is the next step in the evolution of basic PoS consensus. Anyone who wants to confirm transactions and earn associated rewards, must fulfil the special requirements for maintaining the node and win the election, where token holders vote for a delegate. DPoS is used in Graphene-powered blockchains, such as BitShares and Steem.

Proof of Importance

Proof-of-Importance is a variant of combined use of PoS. Unlike PoS here, in addition to the wallet balance, account activity and time of presence in the network matter. The protocol was developed for XEM cryptocurrency of the NEM project.

Proof of Burn

Proof-of-Burn is when coins are sent to a special address from which they can never be spent again. Such an address can be, for example, a hash of a random number. It turns out that instead of burning electricity, coins are burned. By getting rid of them, one can qualify for a lifetime of mining as a lottery, and in this lottery, the odds go up for those who burn more coins. This consensus is implemented in Slimcoin cryptocurrency.

Proof of Space

Proof-of-Space algorithm relies on using more megabytes as resources where the mechanism allocates a significant volume of hard drive space on the user machine in order for the user to start mining. This method is implemented in BurstCoin cryptocurrency.

Proof of Storage

Proof-of-Storage is similar to Proof-of-Space, the only difference is that blockchain participants use the allocated disk space as a decentralized cloud storage. This method is implemented in the Storj service.

Developers create new consensus mechanisms from time to time for use in specific projects and cryptocurrencies or even just as a charitable act based purely on altruism and towards the development of the crypto world.