Title Page
FINTECH NOTE
Blockchain Consensus Mechanisms: A Primer For Supervisors
Prepared by Parma Bains
January 2022
Copyright Page
©2022 International Monetary Fund
Blockchain Consensus Mechanisms: A Primer for Supervisors
Note 2022/003
Prepared by Parma Bains
Names: Bains, Parma, author. | International Monetary Fund, publisher.
Title: Blockchain consensus mechanisms : a primer for supervisors / prepared by Parma Bains.
Other titles: A primer for supervisors. | FinTech notes (International Monetary Fund).
Description: Washington, DC : International Monetary Fund, 2022. | January 2022. | Note 2022/003 | Fintech notes. | Includes bibliographical references.
Identifiers: ISBN 9781616358280 (paper)
Subjects: LCSH: Blockchains (Databases) -- Law and legislation. | Electronic funds transfers -- Law and legislation | Banks and banking -- Technological innovation.
Classification: LCC K564.C6 B35 2022
Fintech Notes offer practical advice from IMF staff members to policymakers on important issues. The views expressed in Fintech Notes are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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Contents
Glossary
I. EXECUTIVE SUMMARY
II. INTRODUCTION
III. WHY CONSENSUS MECHANISMS MATTER
IV. PUBLIC AND PRIVATE BLOCKCHAINS: REGULATORY IMPLICATIONS
A. Consensus Mechanisms in Public Blockchains
Proof-of-Work (PoW)
Proof-of-Stake (PoS)
Delegated-Proof-of-Stake (DPoS)
B. Consensus Mechanisms in Private Blockchains
Practical and Istanbul Byzantine Fault Tolerance (pBFT/iBFT)
Federated Byzantine Fault Tolerance (fBFT)
DiemBFT
Proof-of-Elapsed-Time (PoET)
V. CONCLUSION
VI. REFERENCES
Box 1. Definitions
Box 2. How Consensus Fits into Distributed Systems
Box 3. Selected Risks of Some Consensus Mechanisms
FIGURE 1. Bitcoin Mining Pools November 2020 to November 2021
TABLE 1. Comparison of Different Consensus Mechanisms
Glossary
| AML | Anti–Money Laundering |
| BCBS | Basel Committee on Banking Supervision |
| BFA | Bali Fintech Agenda |
| BFT | Byzantine Fault Tolerance |
| CBDC | Central Bank Digital Currency |
| CTF | Counter Terrorist Financing |
| DLT | Distributed Ledger Technology |
| DPoS | Delegated Pos |
| fBFT | Federated Byzantine Fault Tolerance |
| iBFT | Istanbul Byzantine Fault Tolerance |
| IMF | International Monetary Fund |
| PoA | Proof-of-Authority |
| pBFT | Practical Byzantine Fault Tolerance |
| PoET | Proof-of-Elapsed-Time |
| PoS | Proof-of-Stake |
| PoW | Proof-of-Work |