Blockchain is one of the most useful technologies today whose networks make use of a consensus mechanism. Cryptocurrencies have made blockchain networks more popular among the various existing blockchains, based on the required resources & desired outcome.

The consensus mechanism of crypto assets such as Bitcoin, Ethereum, Dogecoin, and others appear in their whitepaper. This is like the modus operandi of these digital currencies.

Cryptocurrency is becoming mainstream, individuals and organizations are deploying blockchain for various applications. These applications utilize various types of blockchain mechanisms.

In this article, we’ll learn more about blockchain consensus mechanisms and the various types used by blockchain networks.

What is Consensus Mechanism?

A consensus mechanism refers to any number of methodologies used to achieve agreement, trust, and security across a decentralized computer network.

It is an efficient, fair, real-time, functional, reliable, and secure mechanism to ensure that all the transactions occurring on the network are genuine and all participants agree on a consensus on the status of the ledger.

This all-important task is carried out by the consensus mechanism.

Things To Understand About Blockchain Consensus Mechanism

  1. Blockchain consensus mechanism help guarantee that all nodes on a network are synchronized and its transactions are legitimate. They are necessary for blockchain networks to ensure that every node is connected to the same network and all transactions are regularly verified.
  2. Every blockchain network cannot use the same consensus mechanism as different outcomes are desirable with different applications.
  3. While choosing a blockchain consensus mechanism, organizations and blockchain developers must make informed decisions. This is to prevent backwardness from the desired results to a suitable consensus mechanism.

Types of Blockchain Consensus Mechanism

The blockchain consensus mechanisms can be divided into 8 types. They are Proof of Work, Proof of Stake, Delegated Proof of Stake and Proof of Capacity. Others are Proof of Elapsed Time, Proof of Identity, Proof of Authority & Proof of Activity.

The various types of blockchain consensus mechanism are described below

1. Proof of Work (PoW)

This process is also known as ‘mining’ while the miners are called ‘nodes’. Miners solve mathematical puzzles that require extensive computational power. Powerful computers such as ASIC, GPU are used for this purpose.

A successful miner receives a block as reward after solving the mathematical puzzle. Miners require an increasing amount of computational power for finding solutions quickly as the puzzle are solved with trial and error.

The level of difficulty for the puzzles changes with the speed at which the blocks are being mined. In case the block are created quickly, the puzzle would get more difficult and vice versa. Therefore, new blocks have to be created within a particular time frame to carefully adjust the difficulty level of puzzles.

This consensus mechanism is very expensive as light has to be constant then the ASIC mining rigs are not cheap.

Examples of cryptocurrencies that utilizes the proof-of-work consensus mechanism include Bitcoin, Litecoin, Dogecoin, etc.

2. Proof of Stake (PoS)

This is one of the most popular blockchain consensus mechanism. PoS uses a randomized process to figure out who gets a chance to produce the next block. Here, blockchain users lock their tokens for a certain time to become a validator.

Blocks can be produced by users after becoming a validator. These validators are also selected based on the design of the blockchain. Users who own the biggest stake or own coins for the longest period of time have better chances of creating a new block.

Validators get a chance to earn for their work with all or part of transaction fees of all the transactions carried out in the block they created. The proof-of-stake consensus mechanism offers incentives to validators for maintaining the blockchain network.

When compared to other blockchain consensus mechanism like proof-of-work, the proof-of-stake is more energy efficient.

Cryptocurrencies that uses the proof-of-stake consensus mechanism include Ethereum and other crypto assets that are run on ETH network.

3. Delegated Proof of Stake (DPOS)

Call it a digital democracy, you’re not wrong. In this process, users can stake their coins and vote for a particular number of delegates.  The weight of a user’s vote is based on their stake.

The delegate that receives the greatest number of votes gets a chance to produce new blocks. Delegates then get rewarded with transaction fees at it is in PoS.

DPOS consensus mechanism is one of the fastest blockchain consensus mechanisms. This mechanism can handle a higher number of transactions compared to PoW.

4. Proof of Capacity

In this method, solutions to complex mathematical puzzles are stored in digital storages such as hard disks. This entire process is known as ”plotting”.

After a storage device is filled with solutions for the mathematical puzzles, users can utilize it for producing blocks.

Users who are fastest in finding the solutions get a chance to create a new block. This means that users with the highest storage capacity will have higher chances of producing a new block.

5. Proof of Elapsed Time

In this method, the producer of a new block is decided based on the time they have spent waiting on the system. For this purpose, the mechanism provides a random wait time for each user and the user whose wait time finishes the earliest will produce a new block.

However, this method works only if the system can verify that no users can run multiple nodes and the wait time is truly random.

6. Proof of Authority

This is a modified version of the proof-of-stake consensus mechanism where the identities of validators in the network are at stake. In this case, the identity is the correspondence between validators’ personal identification and their official documentation to help verify their identity.

Validators on proof-of-authority stake their reputation on the network. The nodes that become validators are the only ones allowed to produce new blocks.

7. Proof of Identity

In this method, the private key of a user is being compared with an authorized identity. The proof-of-identity consensus mechanism is a piece of cryptographic evidence for a user’s private key that is cryptographically attached to a specific transaction.

Any identified user from a blockchain network can create a block of data that can be presented to anyone in the network. Proof of identity ensures integrity and authenticity of created data.

8. Proof of Activity

This is a combination of the two most popular consensus mechanism, i.e. proof-of-work and proof-of-stake. Here, miners try to find the solution to a puzzle and claim their reward. The blocks created are always simple templates with mining reward address and header information.

Random group of validators are then chosen via the header information to sign a block. The validators with larger stakes will have greater odds of being selected to sign a new block. Once the selected validators sign a new block, it becomes a part of the network.

In the case where the block stays unsigned by some validators, it gets discarded and a new block is utilized. The winning miner and validators gets rewarded as the network fees generated in the process are being distributed.

Also Read- What are Crypto Faucets?


Consensus mechanism plays a huge role in keeping blockchains (public running. The different method allows hundreds of thousands of participants to work on verification and authentication of transactions occurring on the blockchain and its mining without difficulty.