Delegated-Proof-of-Stake as an altrnative to PoW and PoS: comparison and perspectives (p. 1)

Everybody is talking about that hyped new algorithm of consensus - DPoS. It seems to be used in almost all modern blockchains, while some old ones are slowly shifting towards it in a bid to lower transactional costs and environmental pollution fueled by worldwide spread mining. VHCEx team has compiled thorough research on what DPoS actually is and presented it to you in the most reader-friendly form.

Blockchain systems cannot exist without strictly formalized rules of participants behavior. All nodes must abide to those rules. These rules are called "consensus algorithm".

The most popular consensus algorithm is, of course, Proof-of-Work which laid the foundation for Bitcoin network and gave birth to crypto mining as we know it. The alternative algorithms are: Proof-of-Stake, Proof-of-Burn, Proof-of-Storage, etc. You can learn more about some rare algorithms in VHCEx series of articles dedicated to this topic. However, the top-5 blockchains (WAX, EOS, Bitshares, Steem, and Tron) in terms of the number of daily transactions are built on DPos algorithm. Thus, it's worth diving deeper into it.

What is consensus algorithm and what is its purpose?

Consensus algorithm is on one of the basic parameters of a blockchain system on par with hash-functions, block size and network's bandwidth. In the IT, the consensus algorithm is a method with the help of which the distributed nodes in the network reach the agreement regarding the data elements.

A blockchain can be viewed as a radio station that everyone in the world subscribes to and records. On this radio station anyone can broadcast cryptographic statements and everyone will process these statements via a deterministic state machine to arrive at consensus. The challenge we all face is determining which radio stations we care about, who gets to broadcast, and when do they get to broadcast.
-explains the creator of DPoS algorithm, Dan Larimer

The problem of agreement between nodes of a distributed network has been discussed at least since the 1960s — from the beginning of the study of distributed and parallel computing. In April 1985, Fisher, Lynch and Patterson published one of the most important works in the field of distributed systems - “The impossibility of distributed consensus with one defective process”.

Without a consensus algorithm, the blockchain system nodes will not be able to decide which transactions can be considered valid and who will be rewarded for processing them.

Imagine that a group of friends every Friday after work long argues about where to go. In the end, they spend all their time on it. To decide who and how will choose the venue, they need an algorithm for consensus.