What is Consensus Mechanism, in layman’s terms?
Source : Google
Have you ever tried asking your friends to watch a movie together? Everyone will have their own choices and it is very difficult to reach a consensus. In our daily life we all struggle to convince people to reach a consensus. Isn’t it?
In a central entity, to arrive at a consensus is easy. Why? Because you have an authoritative figure who dictates terms which everyone has to agree to, eventually. Even if they don’t like it. ☹️
But to reach consensus in the Decentralized network where there is no central entity and everyone is a stranger to each other is an extremely difficult task. Which brings us to the question, how do they reach a consensus without knowing each other in a trustless way?
Consensus mechanism binds the network together. It secures the network. It is the single source of truth that all the participants believe in.
Well, the solution existed before 2008 but it came to the forefront only after Satoshi highlighted this in his Bitcoin white paper.
Through PoW (Proof of Work), Bitcoin network is secured and the consensus is reached among all the participants in the network. Proof Of Work solves the problem of double spending in a decentralized network.
‘Digital cash’ is data at the end of the day and data can be copied and multiple copies can be created that can be sent across the network – POW solves this major problem.
Preventing Double spend problem – Simplified with Analogy
In a centralized network the problem of double spending is solved by setting up a middleman like BANK.
Who ensures that digital money doesn’t get spent twice by an individual from his account in a decentralized network (Bitcoin)?
The transaction that is sent on the Bitcoin network doesn’t get processed instantly as it is assembled in the block first which waits for the miner to mine it.
Once the block is successfully mined by the miner, the block gets added onto the chain. The transactions in the block get updated in the ledger.
After a few confirmations it is almost impossible to alter the transactions in the block that has been added in the blockchain.
This way you cannot spend your coins “Twice”, once the block is added into the network.
Satoshi Nakamoto is considered a genius for a reason. His invention is nothing less than the invention of fire that has transformed humanity as we know it!
What do you think? Let us know in the comments below.
Disclaimer:
The above blog is for informational and educational purposes only and is not to be construed as any sort of investment advice. Crypto Products & NFTs are unregulated & can be highly risky. There may be no regulatory recourse for any loss from such transactions.
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