Blockchain Consensus: Simple Guide for Beginners
Written by  Daisie Team
Published on 10 min read


  1. What is blockchain consensus?
  2. Why blockchain consensus matters
  3. Types of blockchain consensus mechanisms
  4. How Proof of Work works
  5. How Proof of Stake works
  6. Comparison of Proof of Work and Proof of Stake
  7. Other blockchain consensus mechanisms
  8. How to choose the right consensus mechanism
  9. Future of blockchain consensus

So, you're interested in the intriguing world of blockchain, are you? That's fantastic! You've stumbled upon a topic that's not only gaining traction in today's tech-savvy world but is also reshaping the very fabric of how we understand and utilize technology. It's time to dive into one of the key elements that make blockchain so unique and powerful—consensus. Yes, this blog post aims to provide a simplified explanation of what consensus in blockchain is. So, grab a cup of your favorite beverage, sit back, and let's demystify blockchain consensus together.

What is blockchain consensus?

Consensus in blockchain is a bit like agreeing on the rules of a game before you start playing. Just imagine: you're about to play a board game with your friends. Before you even roll the dice, everyone needs to agree on the rules, right? In a similar way, consensus in blockchain is the set of rules that all participants in a blockchain network agree to follow.

These rules are important because they ensure all transactions are verified and added to the blockchain in a way that's consistent and fair. The consensus mechanism, which is a kind of program, helps blockchain systems to achieve distributed agreement about the state of the ledger—think of it as the scorekeeper in our board game analogy.

Here are a few key points about blockchain consensus:

  • Decentralization: Unlike traditional systems where one authority verifies and approves transactions, in blockchain, multiple participants (also known as nodes) work together to validate transactions. This decentralization is the heart and soul of blockchain.
  • Security: The consensus mechanism makes blockchain secure. Since every node in the network follows the same rules to validate transactions, it's extremely difficult for bad actors to manipulate the system.
  • Integrity: Consensus ensures the integrity of data. Once a transaction is added to the blockchain, it can't be altered or deleted. This provides a high level of trust and transparency in the system.

So, in a nutshell, consensus in blockchain is about agreeing on the rules of the game, ensuring fair play, and keeping the score accurately. But remember, just like different games have different rules, there are different types of consensus mechanisms used in different blockchain systems. But we'll get to that shortly.

Why blockchain consensus matters

Now, you might be thinking, "Okay, I get what blockchain consensus is, but why does it matter so much?" That's a great question, and the answer is simpler than you might think.

First off, consider this: without consensus, there would be no universal agreement on the state of the blockchain. It would be like playing a game where everyone's keeping their own score, and nobody can agree on who's winning. And that's not much fun, is it?

Consensus mechanisms are the unsung heroes of the blockchain universe. They maintain the order and keep everything running smoothly. Here are three reasons why consensus matters:

  • Trustworthiness: Blockchain consensus builds trust in the system. It's the reason why you can be sure that the transactions are valid and haven't been tampered with.
  • Decentralization: Remember how we talked about blockchain being decentralized? Well, consensus is the magic that makes this possible. It allows multiple players to participate, each keeping an eye on the others, making it nearly impossible for any single player to cheat the system.
  • Conflict Resolution: In a blockchain network, conflicts are bound to occur. Different nodes may have different versions of the truth. But don't worry, the consensus mechanism is like the referee—it steps in and resolves these conflicts, ensuring that everyone is on the same page.

So, to answer your question: why does blockchain consensus matter? It's because consensus is the beating heart of the blockchain system—keeping everything fair, secure, and running like a well-oiled machine. Without it, the whole system would fall into chaos. So next time you think about blockchain, remember the crucial role that consensus plays.

Types of blockchain consensus mechanisms

Alright, now that we've covered why blockchain consensus is vital, let's dive into the types of consensus mechanisms that keep this technology ticking. While there are numerous mechanisms out there, we're going to focus on the two most popular ones: Proof of Work (PoW) and Proof of Stake (PoS). We'll also give a quick nod to some other mechanisms that you might come across.

First up is Proof of Work (PoW). This is the original blockchain consensus mechanism, used by Bitcoin and many other cryptocurrencies. It's like a complex puzzle that requires a lot of computational power to solve. The first one to solve it gets the prize: the right to add the next block to the chain.

Next, we have Proof of Stake (PoS). This is a newer and more energy-efficient mechanism. Instead of solving puzzles, validators in a PoS system are chosen based on the number of coins they hold and are willing to 'stake' as a kind of security deposit.

These two mechanisms are the heavy hitters in the world of blockchain consensus, but they're not the only games in town. Other mechanisms you might come across include Delegated Proof of Stake (DPoS), where stakeholders vote on who gets to validate transactions, and Byzantine Fault Tolerance (BFT), which focuses on preventing system failures.

Each of these consensus mechanisms has its own strengths and weaknesses, and they're chosen based on the specific needs of the blockchain. The important thing to remember is that they all have the same goal: to ensure that everyone agrees on the state of the blockchain, keeping it secure and trustworthy.

How Proof of Work works

Let's get into the details of how Proof of Work (PoW) operates. If you've ever wondered, "What is consensus in blockchain? A simplified explanation of Proof of Work might help", look no further.

In a PoW system, think of miners as super-smart mathematicians in a race. The prize? The right to add a new block of transactions to the blockchain. The race involves solving a complex mathematical problem. It's like a gigantic jigsaw puzzle with trillions of possible combinations, and there's only one correct solution.

Here's the cool part - the problem is so complex that it requires massive computational power to solve, but once solved, everyone else can quickly and easily check the solution. It's as if our mathematician has to find the one correct way to put the jigsaw together, but once they do, everyone else can instantly see that it's correct.

When a miner solves the problem, they shout out (not literally, of course) to all the other miners, "Hey, check this out!" Everyone checks their solution, and if it's right, they all agree to add the new block of transactions to the chain — that's the "consensus" part of blockchain consensus.

So, why do miners put in all this effort? They're rewarded with cryptocurrency for their hard work. This reward, along with transaction fees from the new block, makes the whole process worthwhile. But remember, PoW requires a lot of computational power, which means it uses a lot of energy. That's its main drawback, and it's a big one.

How Proof of Stake works

So, you've just dipped your toes into the world of blockchain consensus with an understanding of Proof of Work. Now, it's time to dive a little deeper. Let's explore Proof of Stake (PoS), another key player in the blockchain consensus game.

Remember how we talked about miners being like mathematicians in a race in PoW? Well, in PoS, it's more like a lottery. But it's not just your average, run-of-the-mill lottery. It's a lottery where the more tickets you have, the better your chances of winning. In the world of PoS, your "tickets" are the number of cryptocurrencies you hold and are willing to 'stake' for the chance to add the next block to the chain.

Here's the deal: if you're chosen, you get to validate the next block of transactions and add it to the chain. And guess what? You get a reward for doing this work. It's like being paid for winning the lottery. Pretty neat, right?

But, there's a catch. If you validate fraudulent transactions, you lose your stake. It's a way of keeping everyone honest. The more you have staked, the more you have to lose. So, it's in your best interest to play fair.

Unlike PoW, PoS doesn't require massive computational power. That means it's much more energy-efficient. Sounds great, right? But it also has a downside. The system can favor those with more coins to stake, which can lead to a concentration of power. It's a tricky balance, but it's another fascinating aspect of understanding what consensus in blockchain is all about.

Comparison of Proof of Work and Proof of Stake

Now that we've explored both Proof of Work (PoW) and Proof of Stake (PoS), let's put them head-to-head and see how they stack up against each other. After all, it's this comparison that often sparks the question, "what is consensus in blockchain? a simplified explanation."

First off, energy usage. PoW, with all its computational heavy lifting, is a bit of an energy hog. It's like a hummer driving around a racetrack. PoS, on the other hand, is more like a hybrid car — it's much more energy-efficient.

However, PoS can create a "rich get richer" scenario, since those with more coins have a higher chance of being chosen to validate the next block. PoW, with its mathematical problem-solving race, doesn't have this issue as clearly.

But wait—there's more. In terms of security, it's generally thought that PoW has the edge. Why, you ask? It's because PoW requires a potential attacker to have control over more than 50% of the network's mining power to succeed, which is a very high barrier. In PoS, while the equivalent attack would require owning more than half of the cryptocurrency, there's a perceived lower barrier as acquiring coins can be easier than acquiring high-powered mining rigs.

Finally, let's talk about the rewards system. PoW miners earn their rewards through mining new blocks and transaction fees. In PoS, the validator receives the transaction fees, but there's no reward for creating new blocks. So, while the reward system is simpler in PoS, some might argue that PoW has more potential for earnings.

So, there's our round-up. PoW and PoS, both key to understanding what consensus in blockchain is, each have their pros and cons. Which one's better? Well, that depends on what you value most—energy efficiency, fairness, security, or potential rewards. It's a bit like choosing between a sports car and an SUV. Each has its merits, but ultimately, the choice is yours.

Other blockchain consensus mechanisms

While Proof of Work and Proof of Stake may be the household names in the blockchain consensus world, they're not the only players in the game. There are other mechanisms that could answer the question, "what is consensus in blockchain? a simplified explanation." Let's take a look at a couple of them.

First up, Delegated Proof of Stake (DPoS). This is like Proof of Stake's more democratic cousin. Instead of validators being chosen based on the number of coins they hold, in DPoS, coin holders vote for who they want as validators. It's a bit like a school election, but with blockchain.

Next, we have Byzantine Fault Tolerance (BFT). This one's a bit of a mouthful, but it's not as complicated as it sounds. BFT is all about reaching consensus even when some of the nodes in the network may be faulty or malicious. It's a bit like trying to agree on a pizza topping when you know some of your friends are trying to trick you into choosing anchovies. Not that there's anything wrong with anchovies, of course.

Last but not least, there's Proof of Authority (PoA). In this mechanism, validators are chosen based on their identity and reputation. It's a bit like being chosen for a job because of your impressive resume, rather than how many shares you own in the company.

So, while PoW and PoS may be the most talked-about, there are other options out there. When it comes to understanding what consensus in blockchain is, it's worth remembering that it's a wide and varied field, with many different approaches to achieving the same goal—a secure and trustworthy system.

How to choose the right consensus mechanism

Now that you have some knowledge about the various consensus mechanisms, you might be wondering, "how do I choose the right one?" Well, the answer depends on what you need for your specific blockchain project.

Are you aiming for maximum security? Proof of Work might be your best bet, as it's famously tough against attacks. But keep in mind, it's not very kind to the environment due to its high energy consumption.

Perhaps you're more interested in a model that encourages participation from smaller players? In that case, Proof of Stake or even Delegated Proof of Stake could be the way to go. These mechanisms offer more chances for anyone to become a validator, regardless of how many coins they hold.

If you're worried about rogue players messing up your system, Byzantine Fault Tolerance is designed to handle just that. It's the blockchain equivalent of a referee who's really good at spotting fouls.

And if you value trust and reputation above all else, Proof of Authority could be your pick. Think of it as hiring a very well-vetted security guard for your blockchain.

Choosing the right consensus mechanism is like picking the right tool for a job. It's not about which one is the best in general, but which one is the most suitable for your specific needs. So, take some time to think about what you really need from your blockchain system. And remember, the perfect consensus mechanism for you is out there, waiting to be discovered!

Future of blockchain consensus

So, what does the future hold for blockchain consensus? Well, if you're asking about "what is consensus in blockchain? a simplified explanation," then here's where things get interesting.

Right now, we're seeing the rise of hybrid models. This is where blockchains use more than one consensus mechanism to get the best of all worlds. For example, some blockchains might use Proof of Work for security, but also use Proof of Stake for better energy efficiency. It's like having a superhero team where everyone brings their own unique power to the table.

We're also seeing more innovation in how consensus mechanisms are designed. The aim is to make them even more secure, efficient, and fair. So, don't be surprised if you hear about a new "Proof of Something" popping up in the blockchain world.

What's more, as the blockchain tech continues to mature, we might see consensus mechanisms we can't even imagine today. It's like trying to predict what the internet would look like back in the 1980s. So, stay tuned. The future of blockchain consensus is a thrilling ride that's just getting started!

If you're eager to learn more about blockchain and its applications, don't miss out on the workshop 'Unboxing Blockchain' by Sara. This workshop will provide you with a deeper understanding of blockchain consensus and help you grasp the fundamentals of this revolutionary technology.