Understanding the Delegated Proof of Stake Consensus Algorithm

The Delegated Proof of Stake (DPoS) consensus algorithm is a more efficient and democratic version of the Proof of Stake (PoS) mechanism. PoS and DPoS are used as alternatives to the Proof of Work (PoW) consensus algorithm, which requires a large amount of computational work to secure a decentralized and transparent distributed ledger but is resource-intensive and unsustainable.

PoW systems, such as the one used in Bitcoin, are maintained by mining nodes that use specialized hardware to solve complex cryptographic problems and add new blocks to the blockchain. However, PoW systems have scalability issues and high energy and hardware costs. PoS systems, on the other hand, are secured through internal investments in the cryptocurrency itself and make attacking the blockchain more costly. However, PoS systems are still early and have not yet been tested on larger scales.

DPoS was developed in 2014 by Daniel Larimer and is used by projects such as Bitshares, Steem, Ark, and Lisk. It is a more efficient and democratic version of PoS because it allows token holders to vote for a set of “delegates” who are responsible for validating transactions and adding new blocks to the blockchain. This allows for faster transaction times and a more decentralized decision-making process than traditional PoS systems.