What Is Consensus Algorithm?

A consensus algorithm is a mechanism for achieving consensus on a change of data over a system or any distributed network. They’re common in blockchains because they allow a network of unknown nodes to come to an agreement on the data being stored or exchanged. The most widely used consensus algorithms are Proof-of-Stake (PoS) and Proof-of-Work (PoW).

A blockchain system is, fundamentally, a distributed system that relies on a consensus algorithm that ensures agreement on the states of certain data among distributed nodes. A consensus algorithm is the core component that directly dictates how such a system behaves and the per- formance it can achieve.

The most renowned are:

  • Proof-of-Work
  • Proof-of-stake
  • Proof-of-Authority
  • Proof-of-Space