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Obelisk Consensus Algorithm


The Obelisk Consensus Algorithm is a unique consensus mechanism utilized in the Skycoin blockchain ecosystem. It is designed to address issues of centralization, scalability, and energy efficiency found in other algorithms such as Proof of Work or Proof of Stake. Obelisk employs the Web of Trust system which promotes decentralization and enhanced security within the network without needing excessive computational power.


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Key Takeaways


  1. Decentralization: Obelisk focuses on achieving true decentralization by operating on a trust-based system, rather than relying on resource-intensive Proof-of-Work or Proof-of-Stake approaches. This eliminates the risk of centralization, which is often seen in other consensus algorithms.
  2. Improved Security: Obelisk helps in preventing Sybil and 51% attacks by using a Web-of-Trust mechanism. Nodes rely on the trustworthiness of other nodes by verifying their reputation, which makes it difficult for malicious nodes to compromise the network.
  3. Fast and Scalable: The algorithm allows for quick and efficient consensus without the need for resource-intensive mining. The inherent efficiencies of Obelisk make it capable of handling higher transaction volumes than traditional blockchain consensus models, ultimately resulting in a more scalable and efficient network.


The Obelisk Consensus Algorithm is important in the business/finance world because it offers a unique approach to achieving distributed consensus in blockchain networks, ensuring both security and scalability. By utilizing a combination of a unique node-ranking methodology called the “Web of Trust” and a novel approach to block creation and confirmation, Obelisk tackles inherent issues associated with traditional consensus mechanisms like Proof of Work (PoW) and Proof of Stake (PoS). This innovative algorithm reduces the risk of centralized control, mitigates the chances of network attacks, and ensures faster transaction processing. Consequently, Obelisk strengthens the efficiency and overall reliability of blockchain systems, making them more suitable for various industry applications, including those in the finance and business sectors.


The Obelisk Consensus Algorithm is designed primarily to address the issues of scalability and security within decentralized networks, specifically in the field of blockchain and cryptocurrency technology. It aims to create a balanced ecosystem that maintains efficiency while actively combating instances of fraud and attack on the network. The algorithm’s purpose is to provide the foundation for a network that can run at large-scale with minimal centralization, thereby upholding the principles of transparency, trustlessness, and immutability that underpin the core philosophy of distributed ledger technology.

To achieve its goals, the Obelisk Consensus Algorithm deploys a unique combination of Proof-of-Stake (PoS) and a custom Web-of-Trust system, which assigns nodes different levels of trust and significance based on their past behavior and stake in the network. This allows for a more evenly distributed node network, granting power to competent, bona fide validators while mitigating the influence of malicious players. Consequently, the algorithm enables more robust decision-making processes and faster transactions when compared to conventional consensus algorithms like Proof-of-Work (PoW), which often become bottlenecked by high energy costs and mining centralization. Obelisk’s innovative design empowers networks to achieve greater decentralization and maintain a secure environment, making it an essential tool for modern finance and business applications built upon blockchain technology.


The Obelisk Consensus Algorithm is a relatively new term and not widely adopted in real-world business cases. It was developed as part of the Skycoin project, as Skycoin’s unique consensus mechanism. Though it is not currently being universally applied across industries or within various organizations, we can still explore its potential applications within the finance and business sectors.

1. Decentralized Finance (DeFi): Obelisk Consensus Algorithm could potentially be applied in the DeFi space, offering an alternative consensus mechanism for decentralized applications (DApps) and platforms. DeFi projects could utilize this algorithm to reach consensus on loan repayments, collateralization, and asset management decisions, ensuring a faster and more effective functionality for users.

2. Supply Chain Management: In industries with complex supply chain networks, the Obelisk Consensus Algorithm could be used to achieve consensus on various data elements, such as inventory levels, production rates, and shipment tracking. This could help to streamline supply chain processes and improve overall efficiency, preventing disputes and ensuring the accuracy of real-time data.

3. Voting Systems: In various business and financial contexts, organizations need to make decisions collaboratively. These decisions could involve electing board members, proposing changes to corporate bylaws, or even shareholder voting on mergers and acquisitions. The Obelisk Consensus Algorithm could be applied to create a secure and decentralized voting system that ensures the integrity of the results, preventing manipulation and addressing the drawbacks of traditional voting methods.

Frequently Asked Questions(FAQ)

What is the Obelisk Consensus Algorithm?

The Obelisk Consensus Algorithm is a decentralized consensus protocol used in blockchain technology, specifically in the Skycoin platform. It operates as an alternative to existing models such as Proof of Work (PoW) and Proof of Stake (PoS). Obelisk was designed to address the issues of centralization, energy consumption, and security concerns found in other algorithms.

How does the Obelisk Consensus Algorithm work?

Obelisk operates using a unique combination of Proof of Trust and Web-of-Trust mechanisms. In this system, nodes known as Trust Nodes validate and confirm transactions. Trust Nodes receive transaction fees for their work, while influence is distributed based on ‘Trust Scores,’ enabling a more democratic and decentralized decision-making process than other consensus algorithms.

What advantages does the Obelisk Consensus Algorithm offer over Proof of Work and Proof of Stake?

Obelisk offers several advantages over PoW and PoS, including reduced energy consumption, faster confirmation times, increased security against attacks, and scalability. The algorithm is designed to deter centralization and monopolization of mining power while being accessible to a broader range of users.

How is energy consumption reduced in the Obelisk Consensus Algorithm?

Unlike PoW, Obelisk does not rely on excessive energy consumption to maintain network security. Mining power is not a factor in consensus decisions, which avoids the energy-intensive process of mining. Instead, Trust Nodes validate transactions in a more energy-efficient and eco-friendly manner.

How are transactions confirmed quickly in the Obelisk Consensus Algorithm?

In the Obelisk system, transactions are validated and confirmed by Trust Nodes that propagate the information throughout the network. This allows for faster confirmation times without the need for mining or staking.

Is the Obelisk Consensus Algorithm secure?

Obelisk is designed to be highly secure and resistant to different types of attacks, such as 51% attacks, Sybil attacks, and malicious nodes. The Web-of-Trust system strengthens the network’s integrity by distributing influence based on Trust Scores, making it more difficult for an attacker to gain control over the network.

Can the Obelisk Consensus Algorithm scale with increased usage?

Obelisk has strong potential for scalability due to its efficient design, which does not rely on mining or staking. As the number of Trust Nodes increases, the system becomes more robust and able to handle a higher volume of transactions, making it a suitable choice for growing networks.

Related Finance Terms

  • Blockchain Technology
  • Decentralized Networks
  • Cryptography
  • Peer-to-Peer Communication
  • Byzantine Fault Tolerance

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