The consensus in the blockchain is achieved when all participants of the network agree on the validity of the transactions, ensuring that the ledgers are exact copies of each other. There are 2 most common consensus algorithms:
- Proof of work (PoW), where miners compete against each other to complete transactions on the network and get rewarded.
- Proof of Stake (PoS), where a person can mine or validate block transactions according to how many coins he or she holds.
Why do we need consensus in blockchain? Consensus protocols are a key aspect in allowing a blockchain to function and exist.
What is a protocol? A set of rules describing how the communication and transmitting of data between electronic devices, such as nodes, should work.
- Nakamoto consensus is a name for Bitcoin’s decentralized, pseudonymous consensus protocol
- Consensus is a form of resolution where individuals need to support the majority decision, whether they liked it or not
- In the PoS system there is no block reward, so, the miners take the transaction fees.