Consensus Mechanism
AdvancedA consensus mechanism is the method a blockchain network uses to get its participants to agree on which transactions are valid and in what order they are recorded, without relying on a central authority.
In a decentralized blockchain, thousands of computers maintain copies of the same ledger. A consensus mechanism ensures they all agree on its contents and prevents problems such as double spending, where the same digital money is spent twice.
The two most widely used mechanisms are proof of work and proof of stake. In proof of work, used by Bitcoin, participants called miners compete to solve complex mathematical puzzles using computing power. The winner adds the next block and earns a reward. This is secure but uses large amounts of energy.
In proof of stake, participants called validators lock up, or stake, their own cryptocurrency as collateral. Validators are chosen to propose and confirm blocks, and can lose part of their stake if they act dishonestly. Ethereum switched from proof of work to proof of stake in 2022, cutting its energy use by more than 99%.
For example, on a proof-of-stake network, a validator who tries to approve fraudulent transactions risks losing their staked coins.
Other mechanisms include delegated proof of stake and various systems used by private blockchains. The choice affects a network’s security, speed, energy use and decentralization.
For worked examples and full lessons, visit notesbysara.org.