The Consensus Algorithm You’ve Never Heard Of (But That Powers Billions)

Federated Byzantine Agreement (FBA) is a consensus model that offers decentralized control, low latency, and minimal costs, securing billions in daily transactions. Stellar’s implementation, the Stellar Consensus Protocol (SCP), exemplifies FBA by allowing nodes to select trusted peers, forming quorum slices to achieve consensus. FBA differs from traditional models like PoW and PoS by removing the need for global majority trust, focusing instead on overlapping quorum slices for network-wide consensus. While FBA’s versatility has potential beyond digital currency, such as in IoT networks, it also faces risks like bootstrap trust problems and potential centralization due to popular nodes. Stellar’s SCP emphasizes decentralized, emergent trust offering flexibility, whereas Ripple’s RPCA uses a top-down trust model. FBA’s future use in various applications could significantly impact how digital trust is built and maintained, highlighting its relevance to Stellar’s decentralized philosophy.