Crypto Academy Week 13 Homework Post for Professor @alphafx|Consensus Algorithms

Hello steemains

Glad to be part of another great lecture on Consensus algorithm by professor @alphafx and @levycore. After going through this week's lecture,I'll be writing on PROOF OF BURN CONSENSUS ALGORITHMS.

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Introduction

Consensus Algorithms which is also known as Consensus Protocol or Consensus mechanism is a series of process used to come to agreement on a single data value amongst the nodes, for the maintainenance of the integrity of a single data in the blockchain. The consensus Algorithms are used to solve consensus problems, decide if a transaction is to be sent to a database, to be able to designate nodes as a leader in some distributed task in a network, and also ensuring consistency and rewards amongst the nodes. These Consensus mechanism support lots of real-world systems such as smart grids, drone control, Google's page-rank etc.

There are different types of Consensus Algorithms which includes; proof of work, proof of state, proof of burn, delegated proof of state, proof of authority, proof of importance, proof of capacity, proof of weight, proof of believability etc. Out of which the three major ones are the proof of work, proof of stake and delegated proof of stake. The consensus Algorithms implementation is based on decentralization, security and incentives.
In the course of this homework I'll like to discuss on Proof of burn(PoB).

PROOF OF BURN(PoB)

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Proof-of-burn (PoB) is a blockchain consensus protocol which gives its miners the capability to mine a block by burning their own coins with reduced amount of energy being used, the miner invests part of their money to gain rights to mine blocks and claim it too.

Proof of burn is a new emerging consensus mechanism and an alternative of proof of work (PoW). PoB is the process of burning coins so as to permanently erase or make cryptocurrency scare in circulation. This process helps to reduce inflation. Blockchains that harnesses PoB are able to validate their transactions with this consensus protocol with ease.

The proof of burn consesus allograthms was designed by Iain Stewart. Lain Stewart described this protocol with an analogy of a mining rig where a miner burns his/her own coins for the purpose of acquiring a virtual mining rig, which gives the miner the more power to mine blocks on the blockchain. This Mechanism promises to cover most flaws of Proof of work and Proof of stake, to achieve this PoB provides a more efficient solution to their flaws, with high security level and stability of the network.

Proof of burn utilizes virtual mining rigs unlike proof of work (PoW) which utilizes sophisticated computer systems and resources to validate transactions. As miners burn their own coins it shows their commitment to the network and in turn gives the miners the right to mine more and validate transactions, which is to say "the more coins burnt the more mining power is gained and thus yields a higher opportunity to be delegated as the next block validate in the network".

Burning activities strengthens the networks while miners are rewarded for their activities . These activities. constantly ongoing as miners can mine on top of each other's block and add the transactions of other miners to their block.

To have a better insight of PoB, one needs to know a bit about proof of work( Pow).

Proof of work is the first consensus allograthms implemented by the bitcoin blockchain. PoW is a secure blockchain that requires it's miners to invest mores resources to gain more profit. Like the PoW blockchain, the PoB protocol grants its miners block rewards within a stipulated period of time, these rewards covers the first investment of their burnt coins in the network.

The POW Protocol requires miners to constantly update the blockchain by using the computer resources to solve problems like mathematical equations after which the miners gets rewarded monetarily. The Bitcoin currency uses PoW mechanism. The PoW allograthms is not very efficient because it requires much resources.

☆HOW PROOF OF BURN WORKS

The proof of burn consesus allograthms works on a principle of permitting the miners to burn virtually currency coins, without any energy waste. The miners then gain right to write blocks depending on the amount of coins being burnt.

The process of burning coins involves, sending the coins to a public verifiable address known as an un-spendable address or eater address where they become inaccessible and inactive. These un-spendable addresses are created randomly without having any private key to access them, and hence cryptocurrencies (that is coins) once sent to an eater address cannot be retrieved.

One amazing feature of proof of burn, is that this process doesn't require the consumption of much energy and resources, and this process ensures the network is active and more agile.The miners either burn a native currency or a currency of an alternative blockchain for example Bitcoin. When this is done the miners gets an incentive in the native currency token of it's own blockchain.

At every moment a new block us mined the power of burnt coins reduces slightly or decays completely. For the miners to maintain their high mining power they need to invest in advance technologies too. The process of burning these coins leads to economic scarcity and reduction of coins in the market, thereby resulting to a potential increase in their value and helps to invest in the network's security.

☆EXAMPLES OF PROJECTS THAT USES POB

•SLIMCOIN: The PoB implementation is used by a virtual currency network called Slimcoin. The Slimcoin network provides an avenue for a miner to burn coins and gives them the privilege to compete for the next block and also get more blocks in a long term duration. Although, Slimcoin’s PoB implementation makes use of a combination of three algorithms; POW, POS, and the core POB concept. The process of coin burning POW is harnessed. This is the first coin crypto coin to use proof of burn.

Other projects that uses Proof of burn incudes;
•Counter party(XCP) coin
•Triggers(TRIG) coin

COMPARISON BETWEEN PROOF OF BURN, PROOF OF WORK & PROOF OF STAKE
☆Proof of burn vs Proof of Work

▪︎Coin distribution: In Proof of burn allows users to permanently dispose off cryptocurrency coins by burning and the
proof of work protocol allows users to generate cryptocurrency coins.

▪︎Energy consumption: In proof of burn less energy is required in burning of coins, while in PoW miners require lots of energy in mining process.

☆Proof of stake vs Proof of Burn

▪︎Block validation: proof of stake block validators are required to invest the amount of coins they are willing to invest within a frame of time and during this time they are not accessible to the coins and they get rewarded according to the amount of coins invested. In proof of burn, the block validators are required to permanently destroy the coins.

▪︎Market scarcity: There is no permanent market scarcity in Proof of stake , as the users can get back their coins and sell it if they choose to leave the network, as the coins may just be scare for a period of time. While in proof of burn the complete burning of cryptocurrency coins leads to permanent scarcity of coins in the market

☆ADVANTAGES OF PROOF OF BURN 🔥

•Less energy consumption
Proof of Burn (POB) does not need humingious amount of energy to be effective, which makes it more sustainable and user friendly.

•No need for mining hardware
The coin burning is done by virtual mining rigs and hence no need for a mining equipment or hardware.

•Stability and security
As the miners invests(that is burning coins) with more coins the PoB network becomes more stable and secure.

•Long-term commitment of users
PoB allograthms encourages miners to be committed to long-term projects in the network, which results in maintaining and ensuring price stability in the market.

•Coin distribution
The distribution and mining of coin is done with ease and in a more decentralized and fair manner.

•market scarcity.
The process of coin burning leads to reduction of coin circulation in the market.

☆DISADVANTAGES OF PROOF OF BURN 🔥

•Not eco-friendly
Proof of burn consesus allograthms is not really eco-friendly because most tokens burned are gotten from other Cryptocurrencies like Bitcoin from PoW consensus mechanism and this requires much resources.

•Verification process
The process of verifying a work done by miners is much slower with PoB blockchain compared to the Proof of Work blockchains

•Work capacity
Proof of burn is not yet proven to work on larger scales, as such more work and improvement is needed to confirm its efficiency and security.

•Lack of transparency
The process of burning coin is not always transparent and also not easily verified by an average user/miner

☆CONCLUSION

Proof of Burn mechanism is a new consesus allograthms, that is highly decentralized and sustainable. It requires less energy consumption in coin burning.compared to the proof of work. This mechanism has a greater chance of being more popular in the future as many blockchain will soon adopt this type of Consensus Algorithm.

Thank you Professor @alphafx for this amazing lecture.