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Types of Consensus Mechanisms
Proof-of-work (PoW) and proof-of-stake (PoS) are two of the most prevalent consensus mechanism algorithms, used to validate transactions and add new blocks to the chain.
- In PoW, miners compete to solve complex mathematical problems to add new blocks to the chain. The first miner to solve the problem gets to add the block and receives a reward in the form of cryptocurrency. PoW is energy-intensive and requires specialized hardware, making it less accessible to small miners.
- PoS is a consensus mechanism that selects validators based on the amount of cryptocurrency they hold and stake in the network. Validators are responsible for adding new blocks to the chain and are rewarded with transaction fees. PoS is more energy-efficient than PoW and is designed to be more accessible to small-scale validators.
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