A Quick Look: Consensus Mechanism

Another quick look series today looking at one of the core disruption aspect of blockchain technology: consensus mechanism.

We have provided a quick outline here in simple terms. For further depth, you may refer to the good folks at 101blockchains who had put together a really nice introductory piece (with infographic) on the topic.

What is it?

Simply put, it is a method to make a decision within a group. The method will have a number of key objectives, including:

  • Agreement: Gather as much of the agreements from the group as possible with everyone inside the network participating.
  • Collaboration: Based on the incentive structure, everyone will work as a team and aim towards a better outcome for the entire group’s interest.
  • Equal Rights: Every participant has the same voting rights — no one has more responsibility than others in the group.

Blockchain consensus mechanisms are methods to help create fairness in the online world.

The power of blockchain lies in its network architecture — it can manage all of the above inside a network with millions of participants across the globe. However, it is also important to note that most of the key objectives are partially met based on the current mechanisms (i.e. it is not ‘fully fair’)

The different types of consensus mechanism in blockchain (one liners)

Source: 101blockchain.com

As you can see from the infographics, there are more than a dozen types of consensus mechanism / algorithms each with distinct features. You can read more in the 101blockchain guide but here’s a one-liner summary of the major algorithms for those who want a quick understanding:

Proof of Work (“PoW”): A participant is required to solve a computational problem (prove that is has done work) before it is allowed to contribute to the blockchain (mine and validate transactions) — in return for some financial incentive.

Proof of Stake (“PoS”): A participant can mine or validate transactions according to how many coins they hold (prove how much stake they have). The more they own, the more power they have.

Delegated Proof of Stake (“DPoS”): Similar to proof of stake but in additional participants with more coins will get to vote and elect ‘witnesses’. Simply put, it reduces decentralisation to increase efficiency.

Proof of Capacity (“PoC”): Participants use their storage space and hard drive in order to mine and validate transactions.

Delegated Byzantine Fault Tolerance (“DBFT”): Uses a gamified way for transaction verification.


To find out more about the different types of mechanisms, including pros and cons, examples and further illustrations, you may also be interested in the following great article from Daily Bit