SteemitCryptoAcademy: Consensus Algorithms; Homework submission by @the-patriarch for professor @alphafx lectures; PROOF OF BURN.


Good day to all Steemians and members of the SteemitCryptoAcademy, I am happy to once again participate in this weeks Crypto lectures most especially this one by Professor @alphafx, in which he taught about Consensus Algorithm.

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WHAT IS A CONSENSUS ALGORITHM?

In a centralised system, a single person or mechanism has control over the system, and can make decisions or changes at will, as they wish and when they wish to.

When dealing with a decentralised system, it is a different ball game all together, no single person has absolute control over the system and so decisions and changes have to be made or taken collectively, and this is where consensus algorithm comes into play.

Simply put, Consensus algorithm is a process or mechanism that enables users or machines as the case may be to cordinate and interact in a distributed or decentralised system. It is a process used to reach an acceptable agreement on a single data value in a decentralised system.

For a Consensus algorithm to be really effective, it must take into consideration the fact that not all the interacting systems will be available at all times, it must also take into consideration the fact that some messages or information may be lost along the system, hence it must be fault-tolerant.

Consensus algorithm is designed to create a trust-worthy, secure and reliable system or network out of a system made up of many insecure and untrusted nodes or systems.

TYPES OF CONSENSUS ALGITHMS:

There arare so many types of consensus algorithms and most times they are classified based on how they function. Below are some examples of types of Consensus Algorithms:

  • Proof of Work (PoW)
  • Proof of Stake (PoS)
  • Delegated Proof of Stake (DPoS)
  • Leased Proof of Stake (LPoS)
  • Byzantine Fault Tolerance (BFT)
  • Practical Byzantine Fault Tolerance (PBFT)
  • Delegated Byzantine Fault Tolerance (DBFT)
  • Proof of Importance
  • Proof of Elapsed Time
  • SIEVE
  • Unique Nodes Lists (UNL)
  • Directed Acyclic Graphs
  • Proof of Capacity
  • Proof of Burn
  • Proof of Activity
  • Proof of Weight

These are just to mention a few, but for the purpose of this assignment I will be looking specifically at Proof of Burn.

WHAT IS PROO BURN.

Proof off of Burn is a consensus algorithm system with very minimal energy consumption when compared to Proof of Work.

Proof of Burn was invented by Iain Stewart and presented in December 2012 on the famous Bitcointalk Forum.

In Proof of Burn, miners reach consensus by burning their coins. In this system, coins are seen as mining rigs and a miner burns his coins to buy a virtual rig thus acquiring power to mine blocks; and it should be noted that the more coins burnt, the larger the virtual rig bought.

Unlike the Proof of Work system where you have to mine in other to discover or obtain new blocks and coins, in Proof of Burn, you burn or destroy some of the tokens you already have in order to earn the right to mine more.

HOW DOES THE PROOF OF BURN WORK?

In the P the Proof of Burn protocol, miners must burn their cryptocurrencies which could be the native currency of that blockchain or an alternative cryptocurrency for them to earn the right to mine, and the greater the amount of coin you have burnt, the higher the mining power you get.

Simply put, for you to mine in the Proof of Burn system, you must have to invest in the blockchain so as to show your commitment to the platform, hence the more commitment you show the more mining power you get.

The main rational here is to create a consensus algorithm that would be very expensive and yet more efficient than the Proof of Work. So to perform the algorithm you have to make use of real and expensive resources in the form of cryptocurrencies, making the mining very cost intensive and on end helps to avoid the denial of service attacks and the 51% attacks.

W BURN?

A burn iA burn is simply a process of putting some amount of a particular coin or token out of circulation permanently.

In order to do this, the coins are sent to a verifiable public wallet known as Eater addresses or Dining direction, from where they can never be retrieved again.

The burnt coins are unreachable to any user on that Blockchain platform and this is so because the eater addresses are randomly generated wallets and have no known private keys, hence any coins sent there are completely lost.

This is different from the Proof of Stake system where the miner can retrieve and sell their invested coins whenever they want to leave the platform.

Coin burning reduces the total amount of coin in circulation thereby leading to scarcity and in most cases an increase in the value of the coin.

EXAMPLES OF CRYPTOCURRENCIES THAT USE THE PROOFYSTEM:

Below ar

Below are example of some cryptocurrencies that use the Proof of Burn consensus algorithm:

  • The Slim Coin (SLM):
    This Blockchain uses both the Proof of Burn, the Proof of Work and the Proof of Stake in the creation of it token.
  • Counterparty (XCP)
    This Blockchain uses only the Proof of Burn to generate its tokens, miners here send Bitcoin to eater addresses and get Counterparty (XCP) in reward.
  • Factom (FCT)
    This one uses a process known as burn and mint.

ADVANTAGES OF THE PROOF RITHM.

  • It reqM.
  • It requires very minimal amount of energy or computing power thereby making it more environment or eco-friendly.
  • The burning process is carried out virtually hence eliminating the need for mining equipment or hardware.
  • The process encourages commitment of investors to the long term project thereby creating room for price stability.
  • Security and stability of the network is guaranteed as miners make huge investments through burning of coins hence would exhibit trust-worthy behaviors so as to protect their investments.

DISADVANTAGES OF THE PROORITHM:

  • It canTHM:
  • It can be said to involve a very high level of risk, since there is no guarantee that a miner will recover the complete value of the coin that is burnt.
  • Those who have a lot of coin to burn would end up amassing and controlling the majority of the coins and the blockchain since it is a case of the higher the quantity of coins burned, the higher the mining power acquired, hence the vicious cycle of the rich getinues.

CONCLUSION:

In conclUSION:

In conclusion, I would say that the Proof of Burn system is quite effective and efficienct as it consumes less energy than the Proof of Work system and also requires no computing hardware; but in my veiw I think it is still exposed to vulnerability to some extent as those who have the wherewithal to burn as much coins as possible would still control the system and call the shots.

Cc:
@alphafx
@mariannewest
@wakeupkitty
@davidad
@infovore
@stephenkendal
@steemitblog
@steemcurator01
@steemcurator02
@steemcurator03
@steemcurator02

Until I come your way again
I am @the-patriarch
Thanks for reading

Comments 2


You can also find the link to my tweet of this post:

https://twitter.com/Dee_Patriarch/status/1393648339808399360?s=19

15.05.2021 19:26
0
Satisfactory but not extensive
Task satisfactorily done
Parameter
rating
Presentation 1/2
Content 3/5
Originality 1/3
Total 5

Thanks for participating

17.05.2021 03:14
0