What is Consensus Algorithms

The internet of things (IoT) is a global network that connects devices and people, yet it still confronts various challenges. This chapter explores the challenges banks face and how blockchain technology (integrated with IoT devices) can help address them. The chapter has also conducted a review of the different consensus mechanisms employed by the blockchain systems to find out which consensus method should be deployed by IoT-based banks. The underlying consensus method was first created for permissionless blockchain on a trustless network model using proof-of-work, which is a mathematical challenge that demands a lot of computing power. The findings of the study revealed that considering the regulatory requirements such as permissioned blockchains are best suitable for banks due to know your client (KYC) and anti-money laundering (AML) regulatory requirements. Additionally, for such a blockchain network, the practical byzantine fault tolerance (PBFT) and proof of authority (PoA) consensus methods ensure business resiliency.