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Consensus Mechanism

A fault-tolerant mechanism used in computer and blockchain systems to achieve the necessary agreement on a single data value or a single state of the network among distributed processes.

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Overview

In a decentralized network, there is no central authority to verify transactions. Consensus mechanisms solve this by providing a set of rules that all participants (nodes) follow to agree on the validity of the ledger.

Common Types

  • Proof of Work (PoW): Used by Bitcoin; requires solving complex puzzles.
  • Proof of Stake (PoS): Used by Ethereum; based on the number of tokens held.
  • Delegated Proof of Stake (DPoS): Uses elected delegates.
  • Proof of Authority (PoA): Based on the reputation of validators.

Importance

Consensus mechanisms ensure the security, integrity, and decentralization of the blockchain, preventing double-spending and other attacks.

Related Terms

Distributed Ledger TechnologyMiningStakingValidator