The Blockchain Consensus Algorithm

How does a leaderless blockchain function?

The introduction of Blockchain technology into the present digital realm through the creation of Bitcoin demonstrated how a decentralized peer-to-peer mechanism works without any central controlling authority. While it presented an uncorrupted system coming from a single point of failure, a healthy comparison to traditional structures can produce some questions for enlightenment.

  1. If there is no central controlling authority, who then makes decisions?

Take, for example, a conventional centralized organization. There is the board of directors who decides on organizational matters or a leader who takes the responsibility of running and overseeing the operations. This is not the case with blockchain. A blockchain has no such thing as a leader or a group of deciders. Blockchains operate via consensus algorithms in making decisions.

Elements of Consensus

Unlike in the voting process where the majority rules without considering the minority, we can define consensus as the decision that was agreed upon by the group or community which was reached after assessing that the decision is for the good of all. The elements that comprise a consensus mechanism include:

Agreement Seeking

A consensus mechanism will see to it that there is agreement from the community as much as possible.

All members of the community must come and work together to achieve results that will serve the best interests of the community.


Participating members of the community set their personal interests aside so that they can work as a team, not as individuals.


For consensus to work, members must be egalitarians, meaning, each vote of the community members has equal weight. Each vote is as important as the other.


Involvement must be the battle cry of every member of the community where no one is left out in the consensus processing. Each one is important.


As no one should be left out in the consensus processing, everyone should actively take part in it.

Consensus Mechanisms

Decentralization being the core nature of blockchain technology gave birth to the Distributed Ledger Technology or DLT. For it to work, a consensus mechanism must be in place. The most common consensus algorithms are: Proof of Work (PoW), Proof of Stake (PoS), and Delegated Proof of Stake (DPoS). All these mechanisms utilize DLT which means that all nodes have the same copies of database files which are auto-updated daily.

  1. Proof of Work (PoW)

The Proof of Work consensus algorithm requires a huge amount of energy and computing power to achieve a consensus which makes it the most expensive mechanism. Miners maintain the blockchain by providing computing power in verifying transactions, and to defend the blockchain against attackers. PoW makes the miners compete against each other to build a chain of blocks, hence, the word blockchain. The blockchain stores all the verified transactions which can be viewed by all nodes or network users. Miners use hashing, or mathematical functions, to solve very difficult mathematical puzzles to prove that executed transactions are without errors. Once a block is attached to a blockchain, the miner who solves the mathematical equation first is rewarded with coins. Nakamoto was the first to use this on the Bitcoin network.

  • Proof of Stake (PoS)

The main idea of the PoS is for every miner to place a stake or investment in the network as a commitment to support the blockchain.the miner, therefore, is given the power to mine based on the stake placed. The larger the investment, the higher the chance the miner gets selected to mine the next block. Though the selection is random, the miner’s token still gain weight in the selection. The PoS drawback is that it encourages crypto saving instead of spending.

  • Delegated Proof of Stake (DPoS)

The DPoS consensus mechanism was developed to be a more democratized way of applying the PoS algorithm, by not authorizing those with high stakes to validate transactions. All coin or token owners, for that matter, elect a reputable group of delegates to do the task of verifying transactions. DPoS is proven to be faster in confirming transactions resulting in higher scalability rates.


Public blockchains are very dynamic. It involves hundreds of thousands of participants working and mining round the clock verifying and confirming transactions on the blockchain. DLTs, therefore, must be secured with an efficient and reliable consensus algorithm to make sure that all transactions are authentic and participating nodes do agree on the DLT’s robustness.

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