What is Blockchain Consensus Algorithm?

Blockchain's decentralized distributed record system validity and security is ensured by the consensus structure. Blockchain network and cryptocurrencies, in particular, consensus algorithms contribute to the security of the system as it is a set of rules accepted by the majority.



There are many different cryptocurrency consensus algorithms in practice. The first to be mentioned should be Proof of Work (PoW), the first cryptocurrency consensus algorithm created by Satoshi Nakamoto. In the operation of the PoW system, miners with a high hash rate are more likely to find a solution to the problem created for the next block. This approach is very important for mining. Because of its high energy consumption and special hardware requirements, it makes it unreasonable for miners to invest in disrupting the network, even if the cost is very high, and the system gains durability with this algorithm. Many other cryptocurrencies use this approach, along with Bitcoin and Ethereum, the two most popular Blockchain platforms.



Secondly, the consensus algorithm that should be mentioned is Proof of Stake (PoS), which was developed as an alternative to PoW. What matters in the PoS approach is the share of the next block's validator in the network. Unlike PoW; Instead of creating new crypto as a reward for each block, those who verify are paid a commission. Usually, pre-built cryptos are used or crypto is created with PoW and then moved to the PoS approach.


Those who want to participate in the block creation process lock a certain amount of crypto as their own shares in the network, the size of the stake determines the chance of choosing the one who will create the next block. The higher the stake placed, the greater the chance. Cryptocurrencies like Tezos, Dash, Tron, NEO, Cosmos adopt the PoS approach. The Ethereum network, which still continues with PoW today, continues to work on the PoS approach.