What is a Consensus Mechanism?
A consensus mechanism determines the state of the blockchain. The test of consensus mechanisms is their security and how they respond to problems in the blockchain. The two most common consensus mechanisms are Proof-of-Work (POW) and Proof-of-Stake (POS).
POW:
- In this system, Miners compete with each other to solve cryptographic functions that connect the previous block to the current one.
- The system is secure because defrauding the network requires 51% of the total computing power, yet this requires a large amount of money, more than what would be earned.
POS:
- Stakers stake their crypto for a chance to be chosen as a validator, where they will create the next block in the blockchain.
- This system is secure because it has a system of rewards and penalties for the collateral staked by stakers. Where fraudulent behavior is penalized by taking some of the crypto that was staked as collateral.
These systems are secure, but they must still contend with attacks and contentions on the blockchain. This may include things such as Sybill resistance and Chain selection rules. Sybill resistance is the measure of how well a system or protocol does against a Sybill attack. A Sybill attack is when a user pretends to act as many users. Resistance to such an attack is necessary to establish equality and fairness in the blockchain. Both POS and POW contend against this by having a large requirement of money to pull off such an attack. A Chain selection rule is necessary to determine which chain is right when two, or maybe even more, appear in the blockchain. POW determines this by selecting the chain that has more computational work done on it. POS handles it in a similar fashion, where the total validator votes determine which chain is selected, and these validator votes are determined by the amount of Ethereum staked.
If you want to learn more, check out the links below:
What Are Consensus Mechanisms in Blockchain and Cryptocurrency?
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