What are (the Different) Consensus Systems/Mechanics?
Blockchain is a complicated business. While there are many different facets to get your head around, perhaps one of the most vital elements is the consensus system or mechanics that cryptocurrencies use. This essentially helps to keep things fair and transparent. After all, one of the main benefits of crypto is that it’s decentralized. However, this means that there’s no one behind the scenes ensuring that the records are kept in shape. Instead, it’s up to consensus systems.
There isn’t just one type of consensus system, but there are multiple. With that in mind, here are the different consensus systems/mechanics.
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Proof of Work
Commonly stylized at POW (Proof of Work) is the most common consensus system, for two main reasons: it’s been around since the beginning, and it works. Invented by Satoshi Nakamoto, who is also the inventor of Bitcoin, this system involved mining for hashes. Whoever does so first can add a block of the transaction to the blockchain. Ethereum also uses POW, but their system is a little different, since they incorporate Proof of Stake into the equation, leading to a system that’s called Casper Friendly Finality Gadget (FFG).
Proof of Stake
So what’s Proof of Stake? This system is based on the coin stake of the participant. The more coins you have, the more likely it is that they can add to the blockchain. The only benefit is the transaction fee.
Other consensus systems include Delegated Proof of Stake, Practical Byzantine Fault Tolerance, and Directed Acyclic Graph.
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