Everything You Need to Know About Consensus Algorithms

Oluchukwu Okpala
Blockchain Biz
Published in
3 min readJan 6


A hexagon with ticks at each end that leads to a central bigger tick.
Photo by ExternLabs

Before we jump straight into what consensus algorithms are, we could make things a lot easier to understand by a quick toggle to basic blockchain.

A blockchain is simply a system in which records of validated transactions are maintained across computers that are linked in a peer-to-peer network. These records of transactions make up the blocks in a blockchain. Therefore, a blockchain is just a continuous addition of these validated transactions(blocks) across computers that are linked in a peer-to-peer network.

Then, A peer-to-peer network is simply a group of devices linked together to form a network. Communications and transactions are done in a peer-to-peer network without the need for a centralized authority as all devices or nodes have equal power and can perform the same tasks.

Knowledge of these two key concepts will prove effective in understanding consensus algorithms.

Consensus Algorithms

Understanding that a peer-to-peer network consists of several nodes or devices in a network, it is sufficient to say that at some point, there might be a diversity of opinions. Let us assume the nodes in a particular blockchain wanted to bring forth two numbers that would sum up to 4, and there was a conflict between the nodes as to what two numbers would suffice. There might even be malicious nodes that would try to falsify the process by bringing up false numbers. An intermediary is needed to decide which nodes get to decide on the process, and the output that will be in the best interest of all the nodes. It is quite an easy picture to paint, and that same problem of deciding and verification of sums applies to the blockchain, which brings about the consensus mechanisms.

A Consensus mechanism is a way to validate transactions in a distributed system like the blockchain. It is a system whereby the individuals in a network decide what is best for them by a majority vote and all individuals adopt the decision, whether it is in their favor or not. It is a way to promote equality and transparency in the blockchain.

There is a need to verify and validate transactions because malicious individuals of a network can try to falsify transactions in the blockchain, thereby leading to problems in the long run.

There are different types of consensus mechanisms, but for this article, we will be concerned with the major 2; Proof of Work(PoW) and Proof of Stake(PoS).

Proof of Work(PoW)

Proof of work is the oldest and most popular consensus algorithm in the world today. It is however also considered the most tasking type of consensus algorithm due to its high computational power requirement. Proof of Work works by asking miners to solve a mathematical problem. Once a miner solves the problem, he decides on the next block to be added while the transaction is validated at the same time. The process of solving a problem is known as mining. This type of consensus mechanism can not easily be attacked by malicious miners as it'll require the miner to solve a problem. Nevertheless, the chances of solving the mathematical problem depend on computational power. Distributed systems like Bitcoin, Dogecoin, Monero, Litecoin use Proof of Work mechanism.

Proof of Stake(PoS)

Proof of Stake was created as an alternative to Proof of Work, it substitutes staking for computational power. Here, nodes are required to stake an amount of cryptocurrency for a chance to validate transactions, and the nodes are then chosen at random. This is somewhat similar to a lottery. With proof of stake, the chances of being a validator are randomized by the network. Ethereum, Polkadot, Avalanche, make use of the Proof of Stake mechanism.

Importance of Consensus Algorithms

  1. Consensus algorithms secure the network.
  2. They promote equality and fairness in a blockchain.
  3. They are used to reach a mutual agreement across the blockchain.
  4. They help reduce the chances of a network being infiltrated by malicious nodes.

In conclusion, consensus algorithms deal with the problem of decision-making in any distributed system and prove effective in keeping the blockchain secure.



Oluchukwu Okpala
Blockchain Biz

Tech writer, copywriter, big sister, and dog mum, on her way to world domination. But for now, Independence.