Are Blockchain Algorithms Behind The Success Of Digital Currencies?

Blockchain Algorithms

If you find crypto and blockchain to be just as fascinating as we do, and if you’re interested in expanding your knowledge of physics behind algorithms, then this post is for you.

Transactions and operations on blockchain networks are controlled by algorithms, which are the infrastructure of the networks. These consensus techniques decide how each transaction block is made and added to the chain without relying on a central government.

Bitcoin and Ether have taught us a lot about just the proof-of-work (PoW) and proof-of-stake (PoS) methodologies of validating cryptocurrency. But, like other kinds of technology, they have their problems. Because of this, this essay will focus mostly on less well-known algorithms that can still provide security and functionality.

Proof-of-Activity (PoA)

A blockchain method known as Proof-of-Activity combines aspects of two other algorithms known as Proof-of-Work and Proof-of-Stake. This was done with the intention of warding off attacks using the 51% method as well as double-spending.

On a blockchain that operates on PoA, the technique for producing new blocks is based on PoW. Miners will fight against one another to verify their first block, and when that happens, the system will set the PoS process into motion. Miners will vie against one another to confirm the first block. 

The miner’s address and the reward will be included in the block that is created. After that, the system chooses a fresh group of miners in a completely random fashion. If they have more cryptocurrencies, they will have a better chance of becoming miners.

The technique is different from other solutions because it makes sure that a block is only made after all validators have signed it. If a certain number of validators have not confirmed the block, the subsequent block that is generated will be added to the blockchain before it goes through the queue.

Although the algorithm’s security is satisfactory, it does share several difficulties with PoW and PoS. Even now, it uses a lot of electricity, and users can “stake” currencies to become validators. Decred is one type of cryptocurrency that makes use of proof-of-authority validation.

Proof-of-Burn (PoB)

To combat the excessive energy consumption of PoW, the Proof-of-Burn method was developed. Like in PoS, a certain number of coins must be “burned,” or sent to an unspendable address. In that event, they will have the opportunity to submit an application to join the forces of the validators.

You can increase your odds of being chosen by spending more money. To add insult to injury, people don’t need actual mining equipment when they can utilize virtual ones to verify blocks.

The two advantages that this method provides are:

  • The amount of energy needed to run daily activities is drastically cut down.
  • It’s safer than other systems since validators have to burn coins to approve transactions. Because validating blocks takes time and effort, nodes will be mindful to earn incentives to offset their costs.
  • This algorithm is easier to implement and more effective than the Proof-of-Activity algorithm, but it hasn’t been tested on large-scale networks yet.

Proof-of-Weight (PoWeight)

The Proof-of-Weight protocol derives from the Algorand consensus protocol. Everyone has a certain amount of gravitas, which is usually related to how many bitcoins they have. There is also a rule that says two-thirds of the network’s total weight must come from real people who won’t try to break the system.

If, for example, 30 nodes in the network are checking blocks for correctness, then… A value will be assigned to each node. A network is safe if its honest users account for at least one or two of its total. Byzantine agreements describe this type of arrangement.

This algorithm’s main benefit is that the weight may be calculated not just from the number of cryptocurrencies but from anything of worth. One way that Filecoin users are valued is by the amount of data they save in IPFS. The algorithm is also strong against double-spending attacks.

Motivating the algorithm is the only real difficulty. It’s scalable, but it’s not appealing because nodes aren’t rewarded for participating.

Proof-of-Capacity (PoC)

Proof-of-Capacity is an alternative method designed to address the problems with both Proof-of-Work and Proof-of-Stake.

Before competitors compete to validate transactions, the PoC algorithm makes use of unused space on a computer’s hard drive to store a small number of mathematical answers. Intuitively, the more room you have on your hard drive, the more solutions you can save, and the more probable it is that they will match your mathematical solutions.

This algorithm replaces a computationally demanding procedure with a matching. Even though the algorithm seems easy to use and saves energy, too many people using it could make it hard to find storage space.


Sieve is a fairly simple way to come to an agreement that is combined with another method. Sieve’s goal is to zero in on blocks that have potentially recorded information that differs from one another. 

Sieve is an algorithm that analyzes non-deterministic outcomes and has a limit on the number of times that can happen. When the number reaches or goes over this limit, the whole method is considered to be wrong.

Hyperledger, which is one of the most well-known cryptocurrency projects, uses this technique along with another one.

The Bottom Line

To sum things up, the aforementioned are just 5 of the most prominent alternatives to existing blockchain techniques or consensus processes. When examining cryptocurrency projects, those who are interested in mining should pay attention to the algorithms used by blockchains.

There are other additional algorithms for reaching consensus, such as “proof of activity,” “proof of weight,” “proof of importance,” “leased proof of stake,” etc. 

Because blockchain networks are incapable of operating correctly without consensus mechanisms to check each and every action that is made, it is essential to make an informed selection of one based on the criteria that are placed on the business network.


Redaksi Media
Author: Redaksi Media

Cryptocurrency Media

Notify of
Inline Feedbacks
View all comments