The Key to Blockchain Operation: The Role of Consensus Algorithms

For a blockchain network to function properly, all participating nodes must agree on the order in which new transaction records are added and which ones are valid. The set of rules designed to achieve this “consensus” among network participants is called the consensus algorithm.

Various Characteristics Created by Different Algorithms

The consensus algorithm adopted varies depending on the type of blockchain. The choice of this algorithm directly affects the network’s security level and processing efficiency.

Proof of Work (PoW) is a method where miners solve complex computational problems to generate new blocks. Because it requires proof based on computational power, the network’s security is very robust, but it consumes a large amount of electricity and has relatively slower processing speeds. Bitcoin uses this method, and its immutability and reliability are widely recognized.

On the other hand, Proof of Stake (PoS) selects block generators based on the amount of assets they hold. This significantly reduces computational load, enabling low power consumption and fast transaction processing. Improved energy efficiency is a major advantage of this method, and many new-generation blockchains tend to adopt it.

Practical Selection Criteria

Blockchain developers and projects carefully consider the balance between security and efficiency when choosing a consensus algorithm. The appropriate algorithm depends on the scale and purpose of the network.