Introduction To Consensus Mechanisms And Their Role In Blockchain Technology


Consensus mechanisms are crucial for blockchains, as they support the development of massive networks worldwide. These technologies handle the blockchain’s nodes, which are responsible for confirming transactions and preventing double-spending. At the same time, consensus mechanisms ensure the blockchain’s safety and integrity.

Although they don’t receive much attention, the consensus mechanism became essential after Ethereum introduced the Merge update and changed from the staple proof-of-work to the proof-of-stake system. The change resulted in less energy consumption and a faster network. Hence, if you want to learn how to buy Ethereum, now is the best time, according to Binance data.

But different consensus mechanisms have unique features, which is why they’re more fit to some blockchains than others. Moreover, they require updates to face the dynamic cryptocurrency market, so here are standard and less-known consensus technologies.

The Good Ol’ PoW

Proof-of-work is the first consensus mechanism implemented just for Bitcoin. Through the PoW system, mining competition is given by the has power, allowing those who find the has to add the transaction to the block and mine it. The process requires a lot of computational power, which has made PoW challenging to use, considering the market’s development and Bitcoin’s value.

The PoW consensus was used by Ethereum at first, too, until it led to network congestion due to difficulties in streamlining processes. It was also more susceptible to attacks compared to other mechanisms, so we can say PoW is for the past.

The Fresh PoS

Proof-of-Stake is a more modern consensus mechanism that approaches mining in a unique way than PoW. Using PoS, validators would stake cryptocurrencies, which would contribute to increasing the chances of creating a new stake. It’s usually found in blockchains like Ethereum and Cardano. This method ensures less energy-intensive requirements from miners and also offers more opportunities for staking incentives.

But PoS isn’t perfect. Its staking-based method can contribute to increasing the risks of centralization. Recently, it has been discovered that the control of the network is controlled by capital, leading to massive staking pools controlling the blockchains and, therefore, influencing miners’ chances of leveraging fair mining rewards.


Besides the PoS, there are two other consensus mechanisms inspired and extended from it. For example, DPoS (delegated proof-of-stake) has been used on blockchains like Trona and EOS and is based on a unique system to validate transactions. Token holders delegate voting rights to witnesses who maintain the blockchain, creating a democracy-inspired system where transactions are rapidly confirmed. Image1

There’s also LPsS (leased proof-of-stake) that the Waves blockchain uses, which goes by a similar idea. Holders lease their coin balance to nodes, which benefit from the staking opportunity to validate transactions. Holders then receive a part of the transaction as a reward, which provides a way for passive income and encourages network participation.

The Unique PoA

Proof-of-authority is mainly used in permissionless blockchains because it uses approved accounts to validate blocks and transactions. VeChain is based on PoA and contains validators whose identity and trust are ensured, providing more accountability to the network compared to other mechanisms.

PoA is efficient due to its high transaction speeds that don’t require energy-intensive hardware. However, it requires validators, whether they’re individuals or identities, to prove their trustworthiness, which may lead to centralization risks.

The Underrated PoH

Proof-of-history is one of the most underrated consensus mechanisms because it was created to mitigate the load on networks during the block processing step. Introduced by Solana, one of the most sustainable and efficient blockchains, PoH is based on timestamping, a method that ensures all the network participants are aware of the transaction orders.

PoH ensures low transaction fees, which is why it’s used for money transfers. At the same time, it offers superior scalability, being a fierce Ethereum killer. However, it only has a few validators on the network, so the blockchain is only in its early days.

The Important PoI

The NEM blockchain created proof-of-importance, and it involves the entire network’s support in maintaining it. It determines which of the participants are able to add blocks to the blockchain through the harvesting process, which provides transaction fees in accordance with harvesting a block.

Depending on how many tokens the entity holds or the number of transactions made, the consensus chooses who is more capable of handling the network. This encourages active participation within an ecosystem and offers more equitable practices compared to other mechanisms.

The Outdated PoH

Everyone remembers how we used to burn games on DVDs, and the concept seems to have stuck with people because it follows similar principles in consensus mechanisms. People using proof-of-burn don’t need expensive computational power to mine, so they burn coins to earn the chance to mine. Indeed, it is sometimes compared to PoW because it can be pretty wasteful, but it’s a unique approach.Image3

However, blockchains that leverage PoB ensure continuous scarcity, offering better options for investment compared to PoS, for example. Still, it may be unfair to use by beginners because rich miners will only get wealthier due to the system encouraging them.

The Safe BFT

The Byzantine Fault Tolerance consensus mechanism is another unique technology leveraged by blockchains like Hyperledger or Stellar. The system employs safety and functionality even when nodes are malicious or fail to work, which protects the entire network.

Having a high fault tolerance, BFT doesn’t require significant computing power, ensuring sustainability. Using it also allows transactions to be finalized without multiple confirmations, and nodes can all share the rewards faster than with other mechanisms. Unfortunately, BFT may be vulnerable to Sybil attack, and the communication requirements can be challenging to achieve at all times. These disadvantages must be tackled because BFT has the potential to become an excellent consensus mechanism.

Final Considerations

Consensus mechanisms are the backbone of every blockchain, as they employ the mining model to the network, deciding the efficiency and scalability of the network. There are numerous technologies with unique features created by blockchains, and they all offer better services than the previous ones. For example, the old PoW has become outdated since PoS and PoH are more efficient and less energy-consuming.


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