There are several types of consensus mechanisms, but two of the most common are Proof of Work (PoW)
and Proof of Stake (PoS)
. Let’s break down each one in detail.
1. Proof of Work (PoW)
In PoW
, nodes (called miners
) compete to solve a complex mathematical puzzle based on the data in the block. The first miner to solve the puzzle gets to add the new block to the blockchain and is rewarded with cryptocurrency (like Bitcoin).
The puzzle is a computationally difficult task, usually involving finding a hash that meets certain criteria (e.g., a hash that starts with a certain number of zeros).
PoW
is known for being energy-intensive because it requires a lot of computational power to solve the puzzles. This has led to concerns about its environmental impact.
2. Proof of Stake (PoS)
In PoS
, instead of miners
, you have validators
. Validators are chosen to create new blocks and validate transactions based on the number of coins they "stake"
(lock up as collateral). The more coins a validator stakes, the higher the chance they will be selected to validate the next block.
The selected validator creates the new block and adds it to the blockchain. If they act maliciously or make a mistake, they risk losing some or all of their staked coins as a penalty. This financial incentive ensures that validators act honestly.
PoS
is much more energy-efficient than PoW
because it doesn’t require solving complex mathematical puzzles. Validators only need to prove ownership of a certain amount of cryptocurrency.