A consensus mechanism refers to methods that can be used to reach agreement, trust and security in a distributed computer network.
A consensus mechanism, in simple terms, is a way to verify entries in a distributed database and keep it secure.
Blockchain is a decentralized database that is shared by distributed computers or nodes on a peer-to-peer network. Each peer or node keeps an identical copy of the ledger to avoid one point of failure.
All network updates and validations are immediately reflected in all copies. This allows data integrity and security, as well as confidence in the system, without the need to have it centralized.
Blockchain networks use Consensus algorithms to achieve agreement among many distributed nodes. The Consensus mechanisms prevent unauthorized users from validating fraudulent transactions on the network.
What is Consensus in cryptography?
A centralized system has a central authority that is responsible for maintaining legitimate records and making any updates.
Public blockchains are a decentralized and self-regulating system that operates on a global level without a central authority. They are made up of contributions from thousands of people who work on block mining and transaction verification.
These publicly shared ledgers are subject to the constantly changing status of the blockchain. To ensure that transactions occur on the network, they need an efficient, fair and reliable mechanism.
The consensus mechanism is responsible for this critical role. It is a set of rules that authorize contributions from the various participants of the blockchain (i.e. nodes).
Popular Blockchain Consensus Mechanisms
Proof of work (POW)
This consensus mechanism encourages network participants to put effort into solving an arbitrary mathematical puzzle to maintain the network and avoid system tempering.
This mechanism is used in cryptocurrency mining to verify transactions and generate new coins. Proof-of-work scaling requires enormous amounts of energy. This demand only increases as more miners join the network.
Proof-of-Stake (PoS)
This mechanism allows crypto owners to verify block transactions based upon the amount of coins they have staked. As an alternative to the Proof-of-Work (POW) consensus mechanism, the Proof-of-Stake (POS mechanism) was created to verify a blockchain and add blocks.
PoS mechanisms require validators to hold and stake tokens in order to collect transaction fees. However, PoW mechanisms require miners who solve cryptographic issues.
Proof of Capacity (PoC)
Proof of capacity (PoC), which allows nodes (mining devices) to mine available cryptocurrency using their free hard drive space, is a way for mining devices (known collectively as nodes) to prove their capability. PoC is a way to keep a list on the hard drive of your mining equipment of all possible solutions before you start mining.
The more solution values that one has stored on the hard disk, the greater the chance for a miner to match the hash value in his list. This increases the chances of a miner winning the mining reward.
Author
Chris Munch is a professional cryptocurrency and blockchain writer with a background in software businesses, and has been involved in marketing within the cryptocurrency space. With a passion for innovation, Chris brings a unique and insightful perspective to the world of crypto and blockchain. Chris has a deep understanding of the economic, psychological, marketing and financial forces that drive the crypto market, and has made a number of accurate calls of major shifts in market trends. He is constantly researching and studying the latest trends and technologies, ensuring that he is always up-to-date on the latest developments in the industry. Chris’ writing is characterized by his ability to explain complex concepts in a clear and concise manner, making it accessible to a wide audience of readers.
