Distributed Consensus

November 21, 2023 - Around 2 mins mins to read

Understanding Distributed Consensus

Distributed consensus is a critical component of decentralized networks and machines.

Reaching consensus is straightforward when only two parties are involved, such as when Alice invites Bob to her house and Bob agrees. However, achieving consensus becomes more challenging as the number of parties or nodes on a network increases.

In order to collaborate effectively towards a common goal, all network nodes must agree on a “single source of truth.” This means they need to trust the accuracy of the information they receive, even if other nodes on the network fail.

For every node in the network or participant in a blockchain like Bitcoin, it is crucial to have an identical copy of the ledger. Additionally, there must be agreement that each node’s ledger version is accurate. To achieve this, blockchain projects utilize distributed consensus algorithms.

In the Bitcoin blockchain, consensus and coordination are achieved through Proof-of-Work, a concept introduced by Satoshi Nakamoto. Other consensus mechanisms, such as Proof-of-Stake and Delegated Proof-of-Stake, also exist.

However, most distributed consensus mechanisms share similar fundamental properties. They typically rely on a stake, which can be a store of value like currency or computing power. These mechanisms also involve rewarding validation, often in the form of native coins specific to the blockchain. Transparency is another crucial aspect, ensuring that users can detect any attempts to cheat or defraud the system by validators or proposers.

Proof-of-Work serves as the foundation for blockchain-based consensus and remains the underlying principle of the Bitcoin blockchain, where new blocks are mined. Nevertheless, alternative consensus mechanisms are gaining traction in other blockchain projects. Proof-of-Stake, for instance, is experiencing increased adoption.