In continuation to the first post, we carry on our journey of Blockchain. In this post we are going to look at what is CONSENSUS and how it is achieved in Blockchain.
Blockchain is a de-centralized system. As opposed to centralized systems, where we have a central entity to make the decisions, de-centralized systems work independently. Hence there is a need for a mechanism to bring all the participants in the de-centralized system to a common decision. This is done through “consensus mechanisms” implemented in blockchain.
What is the decision to be made?
In blockchain, the asset that needs to be managed by the de-centralized participants is the STATE of the blockchain. Since each of the participants have their own copy of “blockchain”, it becomes important to have a synced version on each of the participants.
Lets start with an example of a bank account. If we start with the initial balance (genesis) and go on applying all the transactions recorded in the account, anyone having access to the this initial balance and the set of transactions, will arrive at the same final state.
The key part here is the ordered set of transactions and the initial balance. Similarly, blockchain allows everyone to start with a genesis block, and then apply the transactions in the succeeding blocks to arrive at the same final state. This is possible since the ordered set of transactions are available in the blocks.
Thus the ordering of the transactions needs to be consistent throughout the participants of the blockchain network. And this is achieved by recording the transactions in the block, and linking the blocks together to form a sequence order.
So one of the major work for the blockchain network is to group the transactions into blocks and let everybody know about these blocks, so that everyone has the updated blocks (transactions), and also the same sequence of blocks (transactions).
Following are some of the consensus mechanisms used?
- POW (Proof of Work)
- POS (Proof of Stake)
- PoET (Proof of Elapsed Time)
- PoC (Proof of Capacity)
In a future blog, we’ll look at the working of proof of work consensus, and find out how it helps to keep the network synced.
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