Blockchain Trilema and Consensus Mechanisms in Blockchain Technology
It’s been a while since I sat myself down and write about anything related to blockchain or crypto space. This being said, I thought I should start with an introduction on consenus mechanisms, how do they work and why are they needed in blockchain technology. Since there are quite a few consensus mechanisms out there already, each with their own use case of implementation, in this article I will focus on the most common two: Proof of work and Proof of Stake. So grab a coffee ☕ and let’s dive straight into it.
What is a Consensus Mechanism?
Perhaps one of the greatest features of (most) blockchains is decentralization. In order to achieve decentralization in distributed systems, there is the need to enforce a consensus mechanism — a set of rules or instructions that tell the blockchain how to deal with new data. Consensus mechanisms enable parties involved in a transaction to come to an agreeent by giving financial rewards or punishments. They also provide a solution to double spending problem achieving reliability in a network with untrusted peers. In other words, consensus mechanisms are used in order to reach agreement on a single decision within the network.
Consensus protocols provide two guarantees with respect to order and timing: