Crypto Updates

6 Consensus Mechanisms You Need to Know

Consensus mechanisms

Understanding what consensus mechanism are and what they do can be a difficult task for those not in touch with blockchain technology.

However, as you get involved with specific coins, you will certainly need to understand how things operate behind the scenes and how proof of work, proof of stake, and many other mechanisms work, so let’s get to it!

Afterall, if you want the dough to rise, you’ll need proofing.

Consensus mechanisms can greatly vary in form but must always achieve, as the name clearly puts it, consensus.

As such, and to put things in simpler terms, a consensus mechanism is a fancy way of saying “this is the way we are going to do things to make sure everyone is on the same page.”

In turn, when applying that concept to the blockchain and crypto currencies, it means that people are agreeing on the state of blockchain, a state which can include individual transactions, data, smart contracts, and so forth.

While some people tend to focus on the 2 biggest ones, there are many other different models of achieving consensus.

As such, by knowing these 6, even if just briefly, you will certainly get a clearer picture of how all the big coins are handling things.

Proof of Work (PoW)

Arguably the most famous consensus mechanism, the proof of work mechanism is employed by Bitcoin.

The main idea behind proof of work is to use a computer to prove that it put in a lot of work and, the more work you put in, the better the chances of winning a block reward.

Anyone can participate with his or her computer but the more powerful computers one has, the more likely they are to win blocks.

One of the main reasons for proof of work working so well is that if one wanted to attack the network to, for example, give him or herself free tokens, he or she would then have to control 51% of all the computer power, making it nigh impossible to do so as trillions of dollars would be necessary to achieve such feat.

Proof of Stake (PoS)

The easiest way of conveying the difference between the Proof of Work and the Proof of Stake mechanisms is that in PoW competition makes it so that only the one which crosses the finish line gets his or her reward, while in PoS only one participant gets chosen.

This makes it so that when dealing with PoW consensus mechanism one must consider that participants who are putting their work in may simply not get nothing in return, making it very similar to a luck game.

When comparing these two mechanisms, one can easily see that Proof…

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