Understanding consensus mechanisms: Proof of Work or Proof of Stake?

This article was first published on Centrality - Medium

Translations of this article can be found here:

The thing that no one tells you about blockchain, is that it’s only ever as good as its consensus mechanism. Without a good one, the whole concept of decentralisation — however world-changing it seems — falls apart pretty quickly. But how is that possible, you may ask, surely blockchain’s decentralised ledger can survive anything? In reality, without a robust consensus mechanism your efficient, fair, real-time, functional, reliable, and secure public ledger simply doesn’t exist.

But consensus mechanisms are tough to get right. They require finding a workable way to get your whole (or at least clear majority) of your decentralised community to commit to one agreed-upon version of the ledger that is accurate and free from malicious or false transactions. Then there’s the not so small issue of scalability. If everyone hosts a version of your ledger that’s A LOT of computing power that’s only going to increase as your community grows.

Fortunately, a lot of very bright people have spent an awful lot of their time considering these issues and some very elegant mechanisms have emerged. Of those that are used, by far the most popular and successful are the stalwart Proof of Work, favoured by Bitcoin, and the more recent plucky little brother: Proof of Stake, desperate to sort out the issues created by its older sibling.

In this article, we are going to explain not only what consensus mechanisms are but the various pros and cons of the 2 main contenders in the field, and why CENNZnet chose the latter.

What are blockchain consensus mechanisms?

So what exactly is a consensus mechanism? It’s a system that ensures everyone in the network is using a mutually agreed-upon version of the blockchain. An elegant mixture of both social and technical engineering is required to achieve agreement (or ...

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