Page 19 - U4SSC Blockchain for smart sustainable cities

Table 1: Consensus algorithm 15
Consensus Mechanism Characteristics
• The most common consensus mechanism requires complex mathematical resolution to generate a
new block.
• This incentivizes miners to connect multiple computer rigs to the system.
• All of the nodes contain an identical record of transaction and history. Any altered version would be
The Proof of Work (PoW)
rejected by other users, making it so that tampering is highly unlikely.
• As the number of participants increases, the complexity of the puzzle would increase in parallel along
with the energy required to solve them.
• The energy costs of PoW accounts for 90 percent of the total costs for operation.
• Consensus algorithm that depends on the validator’s economic stake in the network.
• Creator of a new block is chosen in a deterministic way based on the amount of coin (i.e. the stake)
they possess.
Proof of Stake (PoS)
• PoS is a much more energy-efficient option and has a lower risk of 51 per cent attack. a
• Risk is the “nothing at stake” problem where block generators have nothing to lose by voting for mul-
tiple blockchain histories. 16
Practical Byzantine Fault Tolerance • Consensus algorithm designed to tolerate faulty or malicious nodes through reaching decisions by
(PBFT) having the majority of nodes agree to the message (less than one-third of the total node).
• Consensus can be reached quickly and efficiently.
• Consensus decides on the validity of a block and the information on a proposed new block will pass
through all the nodes.
• Hashing power is not required in the process.
• The system devised for a low-latency storage system (digital asset-based platforms that do not require
a large amount of throughput yet demand many transactions.
• Less energy-intensive than PoW since it does not involve any complicated puzzles.
Proof of Elapsed Time (PoET) • Consensus algorithm requires participants’ identification.
• PoET is more common in a permissioned style blockchain than a public one due to efficiency reasons.
• The wait time assigned to every individual on the network is completely random. Whoever finishes his
or her fair share of waiting time will get to be on the ledger and create a new block. 17
• PoET prevents high resource utilization, energy consumption and operational efficiency.
• One example of a blockchain network that uses PoET is the Hyperledger Sawtooth.
Proof of Authority (PoA) • PoA does not require any mining activity. 18
• All transactions and blocks are checked with approved accounts for validation.
• Transaction execution and block generation takes place automatically using just the computer power
of the validator.
• This provides a reduction in maintenance costs.
• Key participants of the algorithm are validators leading to centralization. 19
• Relevant in private blockchain deployment and participants are trustworthy. 20

Many other consensus algorithms may provide additional environmental and operational benefits that
would improve blockchain usability in cities and can be considered a viable alternative to the PoW
model.

__________
a The 51 percent attack refers to the possibility of a miner controlling over 51 percent of the computational power of a network has been able to
independently create fraudulent blocks for himself while invalidating the others. In order to carry out a 51 per cent attack in a PoS system, the attacker
would need to already possess 51 percent of its currency, which would be extremely costly. Furthermore, it would not be financially rational for him to
carry out the attack since the value of the currency is tied to the network (i.e. if the value of the network falls, the value of his holding would also fall).

U4SSC: Blockchain for smart sustainable cities 9