Consensus algorithms and blockchain
Proof-of-Work and Proof-of-Stake are undoubtedly the most well-known and widely used consensus algorithms.
However, there are other technical solutions that are either original or declined from the two pillars just mentioned. This in-depth study is devoted to a quick overview of some alternatives, so as to further expand our knowledge.
In detail, we will go over the following consensus algorithms:
- Delegated Proof-of-Stake.
- Pure Proof-of-Stake
- Leased Proof-Of-Stake.
- Proof-of-Authority.
- Proof-of-Burn.
Actually, we could add many more. Indeed, consensus algorithms are a thriving field, where novelties worthy of attention often pop up.
However, we will focus on these five as they are rather well-known or particular.
If you have not yet read the article devoted to consensus algorithms, better take a look before going on: it will be easier.
Enough tergiversation: let’s start our roundup!
Index
Delegated Proof-of-Stake
We begin with a consensus algorithm where voting plays a central role: the Delegated Proof-of-Stake.
This mechanism allows network participants to delegate the creation of new blocks to a third party, usually called a delegate or witness (witness).
Users choose the validator of the next block through a vote. Voting strength increases as the number of coins held increases.
The procedure is in a continuous loop and pushes delegates to act honestly and accurately. If not, inappropriate figures are replaced.
DPoS chains are scalable and democratic, undoubtedly two major advantages. In addition, security is also more than satisfactory.
Conversely, the best validators can achieve high levels of reputation quickly. Therefore, while some aspects benefit, the same cannot be said about decentralization: indeed, networks tend to maintain a fairly small number of validators.
Among the blockchains that adopt DPoS we mention TRON, a well-known creation of Justin Sun. If you are looking for an exchange where you can buy TRON (TRX), perhaps Bitpanda is the place for you!

Pure Proof-of-Stake
Those who are fans of Algorand will be happy: let’s talk about the Pure Proof-of-Stake consensus algorithm.
PPoS is probably one of the most democratic realities around. Let’s find out why.
Anyone can be a validator, as long as they own at least 1 ALGO, the native coin of the chain. There are no other stakes, minimum stakes, or major investments to support.
However, the mechanism is not totally random: the greater the amount of ALGOs we possess, the higher the probability of validating a block.
Algorand can withstand a large number of malicious actors: as long as 2/3 of the total in stakes is in safe hands, there is no chance of rogues taking over.
Thus, the Pure Proof-of-Stake solution makes the network scalable, secure, and democratic.
However, the random nature may not appeal to everyone. On this point, there are declinations of Proof-of-Stake that eliminate this aspect.

Leased Proof-of-Stake
Here we come to a further declination of the PoS model.
Leased Proof-of-Stake (LPoS) is a consensus algorithm similar to Delegated Proof-of-Stake.
Basically, users can “lease” their tokens to a node. The more funds collected by the latter, the higher the probability of generating the next blockchain.
Because of this structure, even users with negligible capital can chase a share of the gain. Thus, it can be argued that Leased Proof-of-Stake is a democratic and inclusive protocol.
At the performance level, an LPoS network is definitely fast as users are encouraged to support the most responsive validators. In addition, these must behave in the correct manner, or else the loss of trust (and funds) that would follow.
Proof-of-Authority
Proof-of-Authority is a consensus algorithm that leverages the reputation of each individual validator.
Each node requires verification of the identity of the owner. By doing so, a high degree of transaction security can be ensured.
While in the Proof-of-Stake environment some crypto capital is brought into play, in PoA it is precisely reputation that is involved.
In case a validator behaves well, working correctly, it will be preserved; on the contrary, anyone will know the name of the responsible party, with all the appropriate consequences.
The Proof-of-Authority algorithm is perfect for those situations where it is necessary to leverage blockchain between companies and large corporations.
Inversely, PoA is not the ideal model for the masses: it is centralized and not designed for ordinary users.
A great advantage of this algorithm certainly lies in customization: two or more companies could leverage the benefits of blockchain in a way that is tailored to their needs. In addition, privacy is also protected.
On the flip side, this technology was not built for ordinary users: centralization and the possibility of censorship are, in fact, well in place. The business sector, on the other hand, finds a very interesting product.
Among the Proof-of-Authority realities, we highlight Microsoft Azure. This is an environment where companies and collaborators can create their own network, shaping it as needed. Interesting, no doubt about it.

Proof-of-Burn
Underlying theProof-of-Burn consensus algorithm is a mechanism similar to Proof-of-Work: validators are miners who receive rewards with each block issued.
There is one major difference, however: in PoB, instead of employing computing power , cryptocurrencies are burned. This demonstrates real interest in the network, just as it does in PoW by investing huge sums in electricity and dedicated hardware.
Proof-of-Burn validators do not have to buy ASICs, video cards or powerful computers. Simply, the more cryptos they torch, the greater their chances of winning the block (as well as the associated prize).
Depending on the network, the coins to be burned vary. In some cases, it is bitcoin; in others, it is the native crypto that is destroyed. A scarcity of the asset in question can then be created, benefiting its value.
Among the advantages of Proof-of-Burn we first mention energy sustainability. The computing power required is negligible and the mining process is only virtual.
In addition, as we mentioned earlier, cryptocurrency burn leads to a reduction in supply. The potential benefits in terms of value are undeniable, provided of course that there is demand.
Finally, decentralization can also benefit from this model. Of course, not everyone could be part of it anyway: the coons to burn are not few!
Moving to the cons, speed is an Achilles heel of Proof-of-Burn. Since there are other, higher-performance solutions, it is difficult to find a compelling reason to choose this architecture.
Also important is the discussion related to energy. PoB does not require huge amounts of electricity. However, in cases where it is bitcoin the crypto that needs to be burned, indirectly Proof-of-Burn requires huge resources.
These pros and cons are the most common. However, we could add others based on the various existing declinations of this algorithm.
PoB is not employed on a large scale and still requires several adjustments.

Consensus algorithms: conclusions
Side by side with Proof-of-Work and Proof-of-Stake we find many other consensus algorithms.
Some are interesting but not very promising at present, see Proof-of-Burn.
Others are designed for business and already operate quite successfully, such as Microsoft Azure’s Proof-of-Authority.
Still, others have enviable numbers that make them important, think of Delegated Proof-of-Stake or Pure Proof-of-Stake.
For us investors, knowledge of the basics is critical. Now, with this smattering we have some additional information that will allow us to more fully evaluate a given project.