Blockchain Consensus: What Needs to Understand?

When discussing the dynamic ecosystem of cryptocurrencies and blockchain technology, the term blockchain consensus is often mentioned. Not without reason, because this is closely related to the security of the transactions you make in the crypto world. So, what is blockchain consensus?

What is blockchain consensus?

Blockchain consensus is the establishment of rules regarding participants' agreement to record transactions.

In a centrally organized system, all decisions are made by one central authority. For example, all companies use a centralized accounting ledger to record all economic transactions carried out within a business.

This ledger is usually maintained by the accounting department, which is the sole entity tasked with maintaining and updating entries.

The same thing applies in blockchain. The blockchain system establishes rules regarding participants' consent to record transactions. You can record a new transaction only when the majority of participants in the network give their consent.

This applies because in a decentralized blockchain system, it consists of many independent users who are spread out and have the same or similar level of authority over the entire network, so decisions are taken collectively.

The blockchain consensus applies to digital currencies such as Bitcoin (BTC), Ethereum (ETH) and other cryptocurrencies.

In its implementation, technical solutions such as proof-of-work and proof-of-stake algorithms are used to ensure network consensus regarding the right transactions to occur and when can be maintained without relying on the center.

Given that blockchain technology is decentralized, meaning it is not controlled by a single entity or organization, it is important for each user to have a reliable way to validate transactions and blocks.

Also read:

How Does Blockchain Work?

What is Mainnet in Blockchain & Why is it Important?

Layer 1 vs Layer 2 Blockchain, What's the Difference?

DISCLAIMER: This article is informational in nature and is not an offer or invitation to sell or buy any crypto assets. Trading crypto assets is a high-risk activity. Crypto asset prices are volatile, where prices can change significantly from time to time and Bittime is not responsible for changes in fluctuations in crypto asset exchange rates.