Consensus is a distributed computing concept that has been used in blockchain in order to provide a means of agreeing to a single version of the truth by all peers on the blockchain network.
In this section, we will address consensus in the context of blockchain technology.
Human-Readable Addresses for the Blockchain World (Part 2)
Some concepts presented here are still relevant to distributed systems theory, but they are explained from a blockchain perspective.
Roughly, the following describes the two main categories of consensus mechanisms: Proof-based, leader-election lottery based, or the Nakamoto consensus whereby a leader is elected at random (using an algorithm) and proposes a final value.
This category is also referred to as the fully decentralized or permissionless type of consensus mechanism.
This type is well used in the Bitcoin and Ethereum blockchain in the form of a PoW mechanism.
BFT-based is a more traditional approach based on rounds of votes.
This class of consensus is also known as the consortium or permissioned type of consensus mechanism.
Why This Matters for Blockchain Technology
BFT-based consensus mechanisms perform well when there are a limited number of nodes, but they do not scale well.
On the other hand, leader-election lottery based (PoW) type consensus mechanisms scale very well but perform very slowly.
As there is significant research being conducted in this area, new types of consensus mechanism are also emerging, such as the semi-decentralized type, which is used in the Ripple network.
Ripple network will be discussed in detail in , Alternative Blockchains.
Key Points to Remember
- Consensus in blockchain Consensus is a distributed computing concept that has been used in blockchain in order to provide a means of agreeing to a single version of the truth by all peers on the blockchain network.
- In this section, we will address consensus in the context of blockchain technology.
- Some concepts presented here are still relevant to distributed systems theory, but they are explained from a blockchain perspective.
- Roughly, the following describes the two main categories of consensus mechanisms: Proof-based, leader-election lottery based, or the Nakamoto consensus whereby a leader is elected at random (using an algorithm) and proposes a final value.
Going Deeper: Advanced Concepts
There are also various other proposals out there, which are trying to find the right balance between scalability and performance.
Some notable projects include PBFT, Hybrid BFT, BlockDAG, Tezos, Stellar, and GHOST.
The consensus algorithms available today, or that are being researched in the context of blockchain, are presented here.
The following is not an exhaustive list, but it includes all notable algorithms.
Conclusion
Consensus in blockchain represents one of the many innovative layers that make blockchain technology so powerful and transformative. As distributed systems continue to evolve, a solid understanding of these core concepts becomes increasingly valuable — not just for developers, but for anyone building, investing in, or working alongside blockchain-powered systems.
Whether you are just starting your blockchain journey or deepening existing expertise, mastering these fundamentals gives you the tools to think clearly about decentralized systems and make smarter decisions in this rapidly evolving space.