What is a Consensus Mechanism?

A Consensus Mechanism is a set of rules that allows a decentralized network of computers to agree on the current state of the blockchain without a central authority.

In a centralized system (like a bank), one server decides which transactions are valid. In a decentralized blockchain, thousands of nodes must agree. A consensus mechanism solves this problem.

It ensures that:
1. All nodes have the same version of the ledger.
2. Attackers cannot rewrite history (security).
3. The network continues to operate even if some nodes fail (fault tolerance).

Main types:
- Proof of Work (PoW): Used by Bitcoin. Requires energy-intensive computation (mining).
- Proof of Stake (PoS): Used by Ethereum. Validators stake their coins to secure the network (energy-efficient).

🧒 Explain Like I'm 5

Imagine a group of friends trying to decide where to eat dinner. They need a way to agree so everyone goes to the same place. That 'way to agree' is the consensus mechanism.

❓ Frequently Asked Questions

Which is better: PoW or PoS?

PoW is considered more secure and decentralized but consumes vast amounts of energy. PoS is energy-efficient and faster but can be more centralized (rich get richer).

What is Byzantine Fault Tolerance?

Byzantine Fault Tolerance (BFT) is a system's ability to continue operating correctly even when some nodes fail or act maliciously. It's crucial for reaching consensus in decentralized networks where participants cannot fully trust each other.

How does mining work in PoW?

In Proof of Work, miners compete to solve complex mathematical puzzles by trying different nonce values until they find a valid hash. The first miner to solve the puzzle gets to add the next block and receives a reward (new coins + transaction fees).