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Consensus Mechanism
Blockchain networks use consensus mechanisms as a protocol to reach consensus on the network’s state and ensure the legitimacy of transactions without the aid of a centralized authority.
The consensus mechanism makes sure that all nodes on the network concur on the blockchain’s current state, and that new transactions are added to the blockchain in a valid and accurate manner. The main types are:
- Proof of Work (PoW). Participants compete to solve complex mathematical problems, and the first one to solve is rewarded with newly minted crypto.
- Proof of Stake (PoS). Participants “stake” their cryptocurrency holdings to become validators.
- Delegated Proof of Stake (DPoS). Similar to PoS, but with a small group of validators who are elected by holders.
- Proof of Authority (PoA). Validators are chosen to confirm transactions based on their reputation.
- Byzantine Fault Tolerance (BFT). Validators reach an agreement through multiple rounds of voting.