Crypto Terms: Letter C

What is Consensus?

Consensus MEANING:
Consensus - an agreement reached between all network participants on the content and order of the blockchain blocks.
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Let's find out Consensus meaning, definition in crypto, what is Consensus, and all other detailed facts.

Consensus is the outcome of an agreement between all participants in a blockchain network on where a block should be located on the chain and what its contents should be.

Typically centrally organized systems have a single authority figure that makes the important decisions. These can be centralized accounting ledgers used by businesses to record economic transactions. The accounting department is normally responsible for managing the ledger, making it the central authority figure for transaction records.

Since decentralized systems contain numerous independent actors distributed around the network, all of them have the same weight in authority decision-making. Thus, all decisions are made collectively, by reaching a consensus.

Blockchain consists of transactions that are updated by miners. Rather than declaring a single central authority, blockchains rely on miners to oversee the transaction entries in the blocks and ensure the information is accurate. To ensure the network is operating optimally, the network members must reach a consensus.

The process of reaching a consensus can be complicated. There is no way to know how many nodes may be malfunctioning or acting maliciously. Thus, the network of nodes may encounter a practical example of the Byzantine Generals’ Problem.

Proof-of-Work (PoW) and Proof-of-Stake (PoS) algorithms are two of the most common consensus mechanisms used in blockchain, including the two biggest blockchain-based cryptocurrencies in the world, Bitcoin (BTC) and Ethereum (ETH).

Consensus mechanisms ensure that the blockchain is maintained properly and the transaction data is recorded correctly. All information management is achieved without declaring a central figure to oversee the blockchain building process.