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Blockchain Consensus Mechanisms

Updated on
Jul 3, 2023

3 min read


Data consistency and security are the principles that guide blockchain technology. There are different mechanisms and algorithms blockchains use to regulate their working throughout the chain to achieve this. In this guide, we will learn about the various blockchain consensus mechanisms and their types.

What is a Consensus Mechanism?

Blockchains are decentralized, so no single entity is allowed to set the truth. All the participating entities (computers) usually do not know each other; thus, determining who is telling the truth or has the correct set of data becomes difficult. This is where a consensus mechanism is required, which helps these computers agree on the truth.

There are different types of consensus mechanisms that have been developed; each has its unique properties and tradeoffs in terms of how secure the agreement is and who gets to vote on what. The general purpose of a consensus mechanism is to manage which participant in the network gets to set the state of truth which everyone else follows and agrees on.

Types of Consensus Mechanisms

Let us discuss the different types of consensus mechanisms:

1. PoW: Proof of Work is the first and most recognizable consensus mechanism developed by Bitcoin's founder Satoshi Nakamoto. In PoW, miners compete with each other to find the transaction hash, and the miner who finds the hash first is allowed to add the transaction to a block and then mine the block. The process of finding the block hash is very computation-intensive; having a high hash rate is aimed by the miners and thus generates more rewards.

2. PoS: PoW requires enormous electricity due to intense computational requirements to catch the hash. In Proof of Stake, miners/validators stake their tokens and are allowed to mine/validate transactions. A miner doesn't have to compete with each other; a miner is chosen randomly to mine the transaction hash. Usually, the higher the number of tokens staked, the higher the chances for a miner to get selected. Ethereum will be moving to a PoS consensus model from its current PoW consensus model, with Ethereum 2.0 now known as Ethereum upgrades.

3. DPoS: Delegate Proof of Stake is a variation of PoS; in this mechanism, all the token holders can collectively choose to elect a list of nodes to mine blocks. Token holders can also vote on network changes, etc. This gives all token holders ownership of the network.

4. PoH: Proof of History came into existence because of Solana; it cryptographically verifies the passage of time between two events using a sequence of computations. It uses a cryptographically secure function input must be executed entirely to generate output, and the output cannot be determined from the input.


If you made it here, you now know a thing or two about different blockchain consensus mechanisms.

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