In a Proof of Location consensus algorithm, users' geospatial coordinates are accounted for as proof of value.
This kind of algorithm is usually employed in cryptocurrency geomining systems.
In a geomining application, users earn rewards for being at a certain place at a certain time. If, for example, a company wished to gather participants for a promotion, at a specific physical store or shopping mall, they could launch a geomining task to reward participants who attended the event.
The idea is that proving that you are at a certain location, at a certain time, using a trusted location tracking device, can signal value to some cryptocurrency networks.
The Geon project, for example, uses Geomining to reward users who get close to a Geon, which is a virtual beacon that rewards Geon Coins to participants who get close enough to a specified geographic location.
Obtaining trusted and correct geographic locations to be transmitted to a smart contract can be achieved by hardware, using secure tracking devices, or by software containing some fraud detection capability (like Pokemon Go and other location-dependent games).
The XYO project uses a "Sentinel Device" to track users' geographic location. The device notifies an oracle that the user has been present at a certain location at a certain time. If a beacon has been configured at that location, the smart contract will detect this and reward the user.
Geomining is decentralized.
Smart contracts are launched by interested parties and users simply need to attend geographic locations in order to interact with the smart contract. There is no need for users to meet or trust each other in a geomining operation.
Return to main article: ELI5 Summary of cryptocurrency consensus mechanisms
X-avax1rlsj0xgvu85awrvkvjlvlqq37q8hmaq2rsraxz. Thank you! ❤