Getting Smart With Consensus Mechanisms: A Complete Guide
One of the biggest issues facing mass-adoption of cryptocurrency, is people just don’t know enough about it.
It seems confusing, overly technical, and sometimes downright impossible to the average person to understand. How can you create something of value, out of thin air? Where does it come from? How does it work?
While seasoned individuals in the crypto space have a solid understanding of the mechanisms that actually create cryptocurrency, to explain it completely to a beginner can pose a challenge. To do our part in educating the public on this fascinating and forward-thinking technology, we’re creating a series of guides, explaining some of the most common, and not so common, consensus mechanisms. We will publish them through the next 10 days, leading up to the launch of our platform – Saving the best for last, of course. Without further ado, let’s dive in to the wonderful world of consensus mechanisms.
OK, I’m confused already. What’s a consensus mechanism?
Let’s break down this seemingly complex term to start; Consensus:
1 a: general agreement: unanimity.
“The consensus of their opinion” based on reports … from the border” —John Hersey
b: the judgment arrived at by most of those concerned the consensus was to go ahead.
2: group solidarity in sentiment and belief.
In the term, “Consensus Mechanism,” the word “Consensus” holds the traditional meaning; for a group to come to an agreement. But, in this case, the group is not people, but computers rather. For a solution to be found, and blocks produced, all the computers in a blockchain network must agree. The consensus mechanism is the method by which the network comes to this agreement. When consensus is reached, blocks are produced. When blocks are produced, the crypto coins are created. You may also hear computers working on a blockchain network, referred to as “nodes”.
Why use different systems?
Consensus mechanisms vary widely. Some of the most established blockchains, such as Bitcoin and Ethereum, use the “Proof of Work” system. Others use what’s called “Proof of Stake”. These are the two most well-known consensus mechanisms that exist today. In our series, we’ll break these terms down into easily digestible, and understandable explanations. We’ll also cover some lesser known systems.
Different systems are used by different networks, all trying to outperform the last. Each consensus mechanism has its strengths and weaknesses. Some are superior, and some – well, we aren’t even sure yet. This emerging technology has some way to go from a technical standpoint, but we’re positive that it’s here to stay.
So, what’s so great about it?
This is perhaps, one of the most fascinating aspects of blockchain – It can’t be broken. It can’t be modified, and it can’t be erased. Because all nodes work independently of one another, in a distributed network – It can’t just be shut down. Hundreds and thousands of nodes operate independently, and cooperatively at the same time. And, because all must agree on, or come to consensus on transactions, they cannot be forged to store incorrect data. A blockchain is immutable, and absolute proof that a transaction took place.
This feature is one of many that allows for improving countless industries with the application of the technology. There’s no room for corruption, dispute, or questionable data. Imagine for a moment, that every industry in existence, had to work with complete transparency to the public. Imagine, if that system, couldn’t be broken, or erased. Here’s the best part – now imagine, that individuals, citizens, inhabitants of the world, and people that these systems really effect, controlled these systems, rather than corrupt politicians and greedy corporations.
That’s the type of world that blockchain has the power to create.
Ok, I’m ready to learn more about consensus mechanisms!
If you’ve gotten this far, you’re well on your way to be a part of the small population that truly understands blockchains, and cryptocurrency. Our series is designed to give you a comprehensive understanding of the innerworkings of these systems, and to teach you the differences between them. We’re just beginning to tap into the true potential of this intriguing technology. And our project is committed to utilizing it for every capability it has to offer.
Be sure to follow us to catch our upcoming series! You can connect with us on social media too!
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Check out one of our latest posts, on Vice Industry Token being integrated into HoloGirls VR!
Apart from understanding there is also an issue of trust. Our species mostly look for some form of validation from authority. They are mostly followers. Be it followers of a state religion or some economic of political ideology. Moreover have a state backed economic system helps them hold someone accountable in case of financial mishap. Blockchain depends on a distributed and decentralised framework. If person using it isn't smart enough and he loses money who will he hold accountable? Given the psychology of species and lack of accountability in crypto world is also a major rate limiting stem in mass adoption. This is the reason people who may have been using crypto for years , still think in fiat. Nonetheless, the technology deployed by blockchain is really powerful and it will evolve and become mass adopted. The question is which version of it - the state backed block-chain or centralised tokens or are humans really capable to become independent and will adopt the decentralised framework.
Very great insight! You're definitely right, the comfort of having someone held 'accountable' is one of the most difficult things for people to let go of, or even acknowledge that they feel the need for. This gives us some great ideas for future topics - the dependency of having something or someone to 'follow' or provide reassurance, whether it be an actual safety-net or an illusion. Thanks for your comment, definitely sparked our interest!
It will not take to much time for cryptocurrencies to be known and used by everyone. #VIT to the moon!
Exactly! The series will all be part of a bigger picture, of how our project aims to simplify and familiarize cryptocurrency for the masses!
Excellent explanations you shared here... Upvoted, resteemed happily :)
Glad you enjoyed it! Much more to come - Stay tuned :)
Hello @viceindustry,
we just noticed you are here on Steemit, heartly welcome!
Best regards and much success for your Steemit activity and for your whole project of course.
@wonderlamp
followed, upvoted and resteemed
@wonderlamp is a brandnew project which want to help undervalued Steemians with original content.