What Consensus Mechanisms are Used in Blockchains

All blockchains are based on consensus mechanisms that ensure the reliability and security of the system. A blockchain is a distributed, decentralized and often public digital database in which all transactions are recorded.


Each transaction is recorded as a block of data, which must be verified by peer-to-peer networks before it is added to the chain. This system solves the problem of double spending and protects the blockchain from fraudulent activities. If you exchange some amount of BNB to TRX, then the transaction information will be recorded in both blockchains.

Consensus mechanisms (also protocols or consensus algorithms) are needed to ensure that all participants (nodes) of the network agree on the current version of history. They are needed to ensure the fault tolerance of the system.

What are consensus mechanisms

Consensus is the process by which a group of different network nodes determines the authenticity of transactions. A consensus mechanism is a technique that ensures that an agreement is reached between nodes. This technique helps to protect the network from hacker attacks and malicious activities.

The industry uses many different consensus mechanisms. They differ in energy efficiency, speed, scalability and other parameters, but they have one goal: to ensure the honesty and reliability of records. Let’s take a look at some of the most famous of them.

Proof-of-Work (PoW)

This is the very first consensus algorithm, it is also considered the most secure and reliable, despite the problems with scalability. It is used in the blockchains of Bitcoin, EthereumPoW, Litecoin, Bitcoin Cash and many others.

In PoW, miners compete by solving complex computational problems. The one who finds the solution first gets the right to add a block to the chain and receives a reward – a fixed amount in the native currency of the blockchain.

Mining new blocks requires huge computing power and a lot of electricity. The transaction costs of PoW are rising, the high cost of equipment is becoming an insurmountable obstacle for new miners, and this raises concerns about scalability limitations and possible centralization. PoW has also been criticized for its impact on the environment. This forced the search for alternative consensus algorithms.

Proof-of-Stake (PoS)

The Proof-of-Stake algorithm is based on a staking system called staking. In this system, users pledge their coins for a chance to become a block validator. The higher the bet amount, the higher the user’s chances. Instead of newly created coins, the user receives transaction fees as a reward.


PoS is seen as a more resilient, greener, and more secure 51%-attack alternative to PoW. However, since the system favors organizations with a large number of tokens, the risk of over-centralization of PoS networks is also higher. However, today this still does not create problems for users who exchange ETH to TRX on LetsExchange.

Prominent PoS platforms include Ethereum (after the Merge upgrade), Solana (SOL), Cardano (ADA), and Tezos (XTZ). In addition to the main version of the PoS, there are numerous, including more democratic modifications.

Proof-of-Activity (PoA)

Proof-of-Activity is a hybrid of the PoW and PoS consensus mechanisms. It is used in the Espers (ESP) and Decred (DCR) blockchain projects.

In such systems, transaction confirmation begins as in PoW. After the miner mines the block, the system switches to PoS, and the successfully generated block header is broadcast to the PoA network. A group of randomly selected validators then signs the hash and validates the block. The reward is shared between the miner and the validators.

The PoA system was designed to combine the best features of PoW and PoS while avoiding their drawbacks. However, it turned out rather the opposite: she inherited both the energy-intensive stage of mining and the bias towards validators with a large number of coins.

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Proof-of-History (PoH)

This algorithm was developed by Solana Labs (SOL). PoH puts “timestamps” on the blockchain itself, checking the passage of time between transactions without having to rely on other nodes.

The implementation of the timestamp method is provided by the so-called SHA-256 verifiable latency function with sequential hashing. It takes the result of the transaction and uses it as input for the next hash. Ultimately, everyone can clearly see the sequence of events. Because VDFs can only be resolved by a single processor account, PoH greatly reduces the computational weight of the blockchain, as well as providing high speed and energy efficiency compared to many other blockchains.

So far, PoH has only been used in Solana and has yet to be tested on a large scale.

A universal method for authenticating distributed blockchain platforms does not yet exist. PoW and PoS remain the most common, but work continues to find better alternatives.



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