6.11.1 Consensus Algorithms

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Consensus algorithms are the basis of all the blockchains/DAGs. They are the most important part of the blockchain/DAG platforms. Without them(consensus algorithms) we will be left with just a dumb, immutable database.1) Vaibhav Saini, hackernoon.com, ConsensusPedia: An Encyclopedia of 30+ Consensus Algorithms, A complete list/comparison of all Consensus Algorithms, 26 June 2-18, Accessed: 7 September 2021 https://hackernoon.com/consensuspedia-an-encyclopedia-of-29-consensus-algorithms-e9c4b4b7d08f The OMG members recommend the Federal Reserve invest Research Development Test & Evaluation (RDT&E) Funding in developing and perfecting any Consensus Algorithms required by the CBDC since they are an essential part of any DIDO implementation such as Blockchain, Distributed Ledger, Directed Acyclical Graphs, etc).

There are a few consequences to not having “the best” Consensus Algorithms for the CBDC:

Loss of confidence in the Federal Reserve and the CBDC by the StakeholdersCost of operating the CBDCUnavailability during disastersVulnerability during CyberattacksCurrently, in the Cryptocurrency world, most of the Mining Operations have moved from being distributed to being centralized and operated be a few select organizations in highly centralized locations. For example,

Fundamentally, Bitcoin mining operations ad traditional data centers are similar in the basic design and operational principles. Power must be brought into the building and distributed to the requirement, air distribution systems cool the equipment, and the building provides protection from outdoor conditions and security threats.2) Sunbird, Largest Bitcoin Mining Farms in the World, Accessed: 9 May 2022, https://www.sunbirddcim.com/sites/default/files/Sunbird_InfoGraphic_Bitcoin.pdf If this is true for a U.S. CBDC, then what advantage does the CBDC have over the Real-Time Payments (RTP) developed by the Automated Clearing House (ACH) Network.