What is the Consensus in Bitcoin? Why is Consensus Necessary? To understand why Bitcoin and many other blockchain systems require a consensus mechanism, it’s helpful to first discuss the famous Byzantine Generals Problem.
Byzartines General Problem
Imagine a group of generals of the Byzantine army camped around an enemy city, each commanding a portion of the Byzantine army. To successfully conquer the city, the generals must agree on a common battle plan. However, they can only communicate through messengers. More importantly, one or more of these generals could be traitors who might try to confuse the others.
The challenge is to find a strategy where the loyal generals can reach agreement on a plan of action while accounting for the possibility that some of the generals might be traitors who are trying to sabotage the consensus.
In the context of the Bitcoin network, each node can be thought of as a general in the Byzantine army scenario. Just as the generals need to agree on a battle strategy despite some being potentially traitors, nodes in the Bitcoin network need to agree on the validity. Problem essentially illustrates the difficulties of achieving reliable consensus in a decentralized environment.
Consensus Mechanism in Bitcoin:Proof of Work (PoW)
Proof of Work (PoW) is a fundamental algorithm used by the Bitcoin system to achieve consensus. Understanding several key concepts is essential to fully grasp how PoW functions:
- Work Difficulty
The “difficulty” of Bitcoin refers to a measure of how difficult it is to find a new block. Main purpose of the difficulty adjustment is to maintain a consistent average time between blocks, which is approximately 10 minutes per block.
- Computational Work: Requires computaional work to find a hash within predetermined range
- Difficulty Level: The difficulty of this task is adjusted by the requirement that the hash output must start with a certain number of leading zeros.
- Verification: Proof of work can be verified efficiency
2. Mining
Mining involves solving the complex computational problem set by the work difficulty. Miners, who are the participants in this process, compete to find the valid hash first. These miners are the operators or nodes in the Bitcoin network that engage in the mining process, dedicating hardware and electrical resources to solve the hash puzzle.
3. Native Currency
To incentivize miners to participate in the mining process and maintain network security, Bitcoin rewards miners with its native currency, bitcoins. This reward includes both new bitcoins created with each block (block reward) and transaction fees from the transactions included in the block.
4. Longest Chain Rule
In the event of multiple valid extensions to the blockchain, the network adheres to the longest chain rule, which states that the chain with the most accumulated proof of work (often the longest chain) is considered the valid one. This rule helps ensure network consensus and guards against double-spending and forks.
Network Components
Bitcoin’s network is composed of various types of nodes and participants,. Here’s a breakdown of the key components::
- Full Nodes: Full nodes download and maintain a complete copy of the blockchain, validating each block and transaction according to Bitcoin’s consensus rules. These nodes support the network by ensuring consistency and reliability, acting as a reference point for verifying transactions and blocks.
- Pruning Nodes: Similar to full nodes, pruning nodes download and validate all blocks and transactions. However, they do not store the entire history of the blockchain. Instead, they keep only the most recent blocks to reduce storage requirements. Pruning nodes provide a balance between participating fully in the network’s validation process and minimizing disk space usage.
- Light Nodes: Light nodes, or lightweight nodes, download only a header of the blockchain. They rely on full nodes for transaction verification and other heavy lifting. These nodes are designed for environments with limited resources, allowing more users to participate in the network without the need for significant hardware.
- Mining Pool: Mining pools are groups of miners who combine their computational resources to increase their chances of successfully mining a block. By pooling resources, miners can achieve more consistent returns, sharing the rewards proportionally to the amount of work each miner contributed to the pool.
