A Guide to Blockchain Consensus Protocols

A consensus algorithm, like bitcoin's proof of work, does two things: it ensures that the next block in a blockchain is the one and only version of the truth, and it keeps powerful adversaries from derailing the system and successfully forking the chain.

In proof of work, miners compete to add the next block in the chain by racing to solve a extremely difficult cryptographic puzzle.

The most common alternative to proof of work is proof of stake.

In proof of stake, your chance of being picked to create the next block depends on the fraction of coins in the system you own.

Proof of activity is a hybrid approach that combines both proof of work and proof of stake.

In proof of activity, mining kicks off in a traditional proof-of-work fashion, with miners racing to solve a cryptographic puzzle.

Criticisms of proof of activity are the same as for both proof of work and proof of stake.

While proof of burn is an interesting alternative to proof of work, the protocol still wastes resources needlessly.

Variations of proof of capacity include proof of storage and proof of space.

Chipmaker Intel has come up with its own alternative consensus protocol called proof of elapsed time.