The Concept of Proof-of-Reputation
Proof-of-Stake (PoS) and Proof-of-Work (PoW) are the two consensus mechanisms used in blockchain systems to verify new transactions, add them to the chain, and create new tokens. But there are more consensus mechanisms in blockchain that you should know about. One of the most up-to-date solutions is Proof-of-Reputation.
Let’s explore the ABCs of this reputation-based consensus model.
What is Proof-of-Reputation?
Proof-of-Reputation (PoR) is a blockchain consensus mechanism that depends on the reputation of the participants to keep the network secure.
It is what it is – whatever business you are in, reputation is vital.
How It Works
Simply put, PoR ensures that the network blocks are validated by authorized accounts, or validators. In PoR blockchains, authorized accounts must be trusted and reputable. If they ever were to attempt to cheat the system, they would face significant consequences.
It is for this reason in PoR, companies act as validators. Unlike individuals, companies would be risking not just their reputation, but also their brand and financial stability.
Validators perform several tasks, including creating blocks, signing them, and distributing them to other nodes. On top of that, the blockchain maintains a list of authorized trusted nodes that get rewards per signed block.
Establishing a Validator
A company must prove its reputation and pass verification before being voted into the network as a trusted node that can sign and validate blocks.
In contrast to PoW, where nodes solving the hash puzzle within the shortest amount of time are selected to publish a block, PoR selects nodes with the highest reputation, or trust value.
It is important to highlight that the selected node automatically increases its reputation by publishing a block.
Proof-of-Stake was one of the first alternatives to Proof-of-Work. Today, many more blockchain consensus mechanisms have seen the light of day, being used to protect a number of properties, including reputation.
Join the ever-growing Coinmetro community on Discord and Telegram to stay up to date with the latest crypto developments, learn and exchange ideas with like-minded people. To begin your trading and investing journey with Coinmetro, take action now and sign up to our platform in just a few steps.