What is Consensus in Blockchain?

Consensus generally means agreement. In the blockchain ecosystem, consensus refers to the agreement between the distributed database, the recorded data, and users’ experience in exchanging and storing value in the form of cryptocurrency.

The idea of cryptocurrency is built upon mechanisms that aid the decentralization process. These mechanisms rely on a peer-to-peer (p2p) network. The peer-to-peer network eliminates intermediaries and centralized authority, and every transaction on the network is validated without a third party. Satoshi, the creator of the first-ever cryptocurrency, promulgated the idea of a p2p network.

Without consensus, p2p transactions will fail. Thus, there must be an agreement between the nodes on the network before transactions are approved. All blockchain networks rely on a consensus mechanism.

What is Consensus Mechanism?

A Consensus mechanism simply refers to the process of verifying transactions on a network. This means that different nodes on the network choose what transactions to validate. A Consensus mechanism also ensures the security of the blockchain network is not breached.

Before blockchain transactions are verified, blocks are passed through a hashing function and validated by over 50 percent of the nodes across the network. This was Satoshi’s original idea, as explained in Bitcoin’s whitepaper, and it works to date. It eliminates the need for a Centralized body or authority in upgrading and updating transactions on the ledger.

Examples of Blockchain Consensus Mechanisms

There are different blockchain networks in the crypto ecosystem. The mechanism of consensus each adopts varies from one blockchain to another. For example, the Bitcoin and Dogecoin blockchains adopt the Proof-of-Work (PoW) consensus mechanism, while the Solana chain utilizes the Proof-of-History consensus model.

Proof-of-Work (PoW)

The PoW is an agreement on Bitcoin’s blockchain which aids the verification of transactions before new coins can be mined. Since its inception in 2015, the Ethereum network has utilized the Proof-of-Work (PoW) consensus model just like Bitcoin. However, Ethereum will migrate from Proof-of-Work to Proof-of-Stake (PoS) in the coming days.

Proof-of-Stake (PoS)

The PoS mode of validation involves staking cryptocurrencies to validate transactions. The gas fees earned from transactions are distributed to stakers as rewards.

One notable advantage of this consensus mechanism is its energy efficiency. When Ethereum fully migrates from Proof-of-Work to Proof-of-Stake, the network will be 99% more efficient.

Proof-of-Capacity (PoC)

The PoC consensus mechanism allows the contributing nodes on the network to share memory space. In the PoC model, the more extensive the memory space of a node is, the more right the node is granted to maintain the ledger.

Proof-of-Activity (PoA)

The PoA consensus model is used in Decred’s blockchain. It is a hybrid of the proof-of-work (PoW) and the proof-of-stake (PoS).

Proof-of-Burn (PoB)

You might have heard the term burning in cryptocurrency. It involves sending a certain amount of cryptocurrencies to an inaccessible wallet address. They are lost forever; thus, the term burnt.

Proof-of-History (PoH)

This refers to the cryptographic activity verifying the passage of time between two events on a blockchain. The Solana project designed this type of consensus mechanism, and it is similar to the proof of elapsed time.

Proof of Elapsed Time (PoET)

This consensus mechanism is similar to the PoH as it cryptographically encodes the passage of time without utilizing many resources.


The bottom line remains that the consensus mechanism adopted by any blockchain is the framework it utilizes to define a set protocol, such as validating transactions and storing them on its blockchain.