Consensus Mechanism: Joining Forces for a Decentralized Future

In a decentralized system, no one has control over the system therefore security becomes the biggest challenge. However, consensus mechanism solves that problem by bringing an algorithm to approve transactions or records in a decentralized ledger where the fake or fraudulent records are rejected. 

What is Consensus Mechanism?

Consensus mechanism is a system that cryptocurrencies use in validating the authenticity of transactions and maintaining the security of the blockchain. Consensus mechanism in the blockchain are referred to as activities of mining and staking. However, their primary purpose is to secure the network.


Proof-of-work involves miners who solve complicated mathematical puzzles to produce new blocks.

The block must satisfy requirements when the block of data is cryptographically “hashed”. Hash values are cryptographic identifiers called secure hash algorithms(SHAs). For example, Bitcoin uses SHA-256 for verifying transactions.

 Miners find the value of hash and aimed at solving the algorithm before anyone else. Once the block is created and verified miners are rewarded with a specific amount of cryptocurrency which they are supporting.


In a blockchain, adversities can attack and can exploit the system. To tackle this and make blockchain secure Bitcoin introduced PoW mechanism. PoW sets up computationally difficult puzzles to avoid forking.

PoW helps to prevent unauthorized access to the blockchain.


The amount of power and energy consumed in this process is a major drawback. The reason for consuming a large amount of power and energy is the signature verification of blockchain.

It can have negative impact on environment and it is also a big hurdle for scalability of blockchain applications as the need for computational power will increase with the increase in network size.


Proof-of-stake is the second most popular consensus mechanism. Ethereum shifted towards proof-of-stake mechanism from proof-of-work to be more efficient, scalable and sustainable. 

PoS does not require computational power but it requires to stake some of the coins or tokens.

Earlier Ethereum is working on the proof-of-work mechanism which includes multiple miners to validate the transactions.

There has been development in Ethereum and now it is working on proof-of-stake mechanism where the validators are supposed to stake a few Ether (token of Ethereum) in exchange they get a chance to validate new transactions and earn rewards but if they give the wrong output they may lose their stake as a penalty. This is the next version of Ethereum known as Ethereum 2.0.

In PoS mechanism validators have to stake some of their coins in exchange they get rewards if the validations are done properly otherwise have to lose some or all the coins as a penalty.


The main purpose of PoS is to deal with attacks, in PoW attackers keep the chain secret and broadcast the longest secret chain to invalidate the transaction. To prevent that PoS implies having current hash and can credit the transaction’s stake only in the blockchain. It saves computational power and energy and does not harm the environment.


The blockchain-powered by PoS mechanism is very less because it is vulnerable to security attacks. In PoS mechanism forks can be increased.

Related: Non-Fungible Tokens(NFTs): Buy, Sell & Discover Internet of Goods


The applications based on blockchain are widely important throughout all fields. Consensus mechanism is the main component of blockchain. Consensus mechanism solves the security problem through proof-of-work and proof-of-stake mechanisms. They both are vital parts of the blockchain.

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