Blockchain comparison

Hi all. In this post, I am going to share a comparison between blockchain technologies used to create different applications nowadays. This will be an analysis which technology is better to solve different issues.

Firstly I should mention what the blockchain is, but I think if you came to see the comparison of blockchain technologies, you already on the higher level of knowledge in this area.

I am not going to describe here in detail all information about specific blockchain technology. I will try to dig deeper later on, and link the posts here.

Consensus protocols

Proof of Stake (PoS)

• How It Works: Validators are chosen to create new blocks and validate transactions based on the amount of cryptocurrency they hold and are willing to “stake” as collateral.
• Pros:
  • Energy-efficient compared to Proof of Work (PoW).
  • Reduces centralization risks associated with mining pools.
• Cons:
  • Initial wealth disparity can lead to centralization.
  • Less battle-tested than PoW.

Proof of Work (PoW)

• How It Works: Miners compete to solve cryptographic puzzles to add new blocks. The first to solve it gets a reward.
• Pros:
  • Highly secure and resistant to certain types of attacks.
  • Decentralized, as anyone can participate in mining.
• Cons:
  • Extremely energy-intensive.
  • Slower transaction speeds and scalability challenges.

Proof of History (PoH)

• How It Works: Used in conjunction with Proof of Stake in Solana, PoH establishes a historical record to prove events occurred at a specific time.
• Pros:
  • Ultra-fast transaction validation.
  • Scalable for high-performance applications.
• Cons:
  • Complex implementation.
  • Less decentralized than traditional PoW or PoS systems.

Proof of Staked Authority (PoSA)

• How It Works: Combines Proof of Stake and Proof of Authority, where a small number of validators are selected to validate transactions.
• Pros:
  • High speed and low costs.
  • Suitable for enterprise use cases.
• Cons:
  • More centralized due to reliance on selected validators.

Nominated Proof of Stake (NPoS)

• How It Works: Users (nominators) select validators they trust, and these validators secure the network.
• Pros:
  • Enhanced decentralization compared to traditional PoS.
  • Encourages community participation.
• Cons:
  • Complexity in managing nominations.
  • Validators’ misbehavior can impact nominators.

Liquid Proof of Stake (LPoS)

• How It Works: A variant of PoS where token holders can delegate their stake to validators.
• Pros:
  • Flexible and inclusive for token holders.
  • Maintains decentralization and security.
• Cons:
  • Delegation can lead to concentration of power.

Pure Proof of Stake (PPoS)

• How It Works: Randomly selects validators based on their stake, ensuring fairness and reducing energy consumption.
• Pros:
  • Fair and efficient.
  • Environmentally sustainable.
• Cons:
  • Requires robust randomness for validator selection.
  • Limited adoption outside Algorand.

Hashgraph Consensus

• How It Works: Uses a gossip protocol and virtual voting to reach consensus quickly without the need for mining or staking.
• Pros:
  • Extremely fast and energy-efficient.
  • High throughput and low latency.
• Cons:
  • Not entirely decentralized (permissioned governance).

Asynchronous Byzantine Fault Tolerance (aBFT)

• How It Works: Transactions are confirmed once a supermajority of nodes agree, without needing synchronization.
• Pros:
  • Extremely fast and highly scalable.
  • Fault-tolerant and secure against Byzantine attacks.
• Cons:
  • Complex to implement.
  • Fewer nodes participating can reduce decentralization.

Models

Account-Based

• How It Works: Balances and transaction histories are associated with individual accounts, much like a ledger in a bank.
• Used By: Ethereum, Binance Smart Chain, Solana, Avalanche, etc.
• Pros:
  • Simplifies smart contract interactions (e.g., transferring tokens between accounts).
  • Easier for developers to conceptualize and work with.
• Cons:
  • Requires more storage as accounts grow in complexity.
  • Higher risk of state bloat, which can slow down the network over time.

UTXO (Unspent Transaction Output)

• How It Works: Tracks unspent outputs from transactions. Each transaction consumes UTXOs as inputs and produces new UTXOs as outputs.
• Used By: Bitcoin, Bitcoin SV.
• Pros:
  • Highly efficient for transaction verification.
  • Stateless: The blockchain doesn’t need to track all account balances.
  • Naturally parallelizable for increased scalability.
• Cons:
  • Smart contract functionality is more challenging to implement directly.
  • Managing UTXOs can be conceptually harder for developers used to account-based models.

3. Extended UTXO (EUTXO)

• How It Works: Extends the UTXO model by adding support for more sophisticated smart contracts and state management.
• Used By: Cardano.
• Pros:
  • Deterministic: Ensures predictable execution of smart contracts.
  • Scalable: Transactions can be processed in parallel.
  • Inherits security and efficiency from UTXO.
• Cons:
  • More complex for developers to adopt initially.
  • Requires new tools and paradigms, diverging from account-based standards.

Summary

As I mentioned, I am going to update this post continuously so probably this what you have just read is not finished post, but nevertheless thanks for reading it 🙂