Question 1
A financial consortium is designing a permissioned blockchain for interbank settlements. They are evaluating consensus mechanisms. The primary requirements are high transaction finality, low latency, and the ability to function correctly even if up to one-third of the validator nodes are malicious or offline. Which consensus algorithm is specifically designed to meet these requirements?
Answer and explanation
Correct answer: C
Practical Byzantine Fault Tolerance (pBFT) is the ideal choice for this scenario. It is designed for permissioned networks, provides immediate transaction finality, offers low latency, and is resilient to f = (n-1)/3 faulty nodes, which matches the requirement of tolerating up to one-third malicious or offline nodes. PoW has probabilistic finality and high latency. PoS is generally for public networks and also has probabilistic finality in many implementations. RAFT is not Byzantine fault-tolerant and cannot handle malicious actors.