Consensus Mechanisms
The consensus mechanism is a system that cryptocurrencies such as Bitcoin and Ethereum use to verify the authenticity of transactions and maintain the security of the underlying blockchain. This system ensures that all legitimate transactions are recorded on the blockchain and each copy of the blockchain contains all valid transactions. By consensus, we mean that a general agreement has been reached.
What are Consensus Mechanisms?
The fact that blockchain networks are not managed by any center requires that the necessary approval be given by the participants to perform a transaction within the network. Each participant, who is a node, can validate transactions by fulfilling the requirements of the relevant consensus mechanism, and this validation is unanimously approved. In this way, to add a new block to the network or make a change to the chain, the approval of at least 51 percent of the network participants becomes a necessity. This is an effective way to prevent scam-driven transactions, modifying existing transactions, or other hacks.
In theory, an attacker could control 51% of the network, compromising consensus. Consensus mechanisms are designed to make the 51% attack, which is an economic attack, impossible.
Types of Consensus Mechanisms
Proof of Work is the consensus algorithm used in Bitcoin and Ethereum. In projects where PoW algorithms are used, miners need to solve the problem in order to add blocks to the chain. The first person to solve the problem gets the right to add the block to the chain.
Learn more: Cryptocurrency Mining
Basically, the amount of tokens held by the miner is important. Miners’ chances of adding blocks are directly proportional to the number of tokens they have.
- Delegated Proof of Stake (DPoS)
DPos is produced from the Proof of Stake algorithm. In DPoS, blocks are mined by predetermined user groups and these groups are called witnesses. Witnesses are chosen by token holders. Token holders have voting rights in proportion to the tokens they own. Thus, the witnesses receive a block reward when they fulfill their duties, and they are punished by being removed from among the witnesses when they misuse their duties.
Learn also: What is Proof-of-Burn (PoB)?
