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Top 10 Consensus Mechanisms

Top 10 Consensus Mechanisms

There are multiple types of consensus mechanisms. These are necessary to achieve consensus on a blockchain, which means reaching an agreement on the transactions being made. Without approval, new blocks cannot be added to the blockchain. As a blockchain is a decentralized system secured by validator nodes, a general method is required to approve all transactions. For this purpose, various consensus mechanisms have been established. Instead of transactions being controlled by a central entity, they are verified by different nodes that reach consensus on the transactions, ensuring their secure execution. Let's explore the ten most well-known consensus mechanisms.

1. Proof of Work (PoW)

The oldest and most well-known consensus mechanism is Proof of Work, employed by Bitcoin. It involves validating blocks by guessing a sequence of numbers known as the nonce. This nonce consists of 64 numbers that need to be guessed. Miners continuously attempt to guess this number throughout the day. It requires significant computational power and is often done using powerful computers. The miner who believes they have guessed the number first presents it to all the nodes. If the number is approved by at least 51% of the other nodes, it is considered guessed correctly, and the block is added to the blockchain. The miner who guessed the number is rewarded with the respective blockchain's cryptocurrency. Currently, for Bitcoin, this reward is 6.25 BTC. Initially, when the system started, it was 50 BTC. Miners are rewarded for their work, hence the name Proof of Work.

2. Proof of Stake (PoS)

Proof of Stake is a newer mechanism that serves as an alternative to PoW. In this approach, you are not rewarded based on the amount of work you perform but rather based on the amount you stake. By "staking" (locking) your coins, which you then cannot buy or sell, you can validate transactions. Each transaction is randomly presented to nodes, which can choose to approve or reject it. The hash of the block from this node is shown to all other nodes, and they can place bets on the validity of these transactions. When the majority of nodes agree with the proposed block, the random node is rewarded, along with everyone who bet on that node. If the majority disagrees, the random node loses its stake and receives no reward. Then, a new node is randomly selected to share its data. Thus, trust is placed in the honesty of each node, as honesty is rewarded, while any dishonesty results in the loss of one's stake.

3. Delegated Proof of Stake (DPoS)

An adaptation of the regular Proof of Stake mechanism is the Delegated Proof of Stake (DPoS) mechanism. In this approach, delegation is made directly to specific nodes to validate transactions. Anyone staking their coins can vote for a block producer. The more coins you have staked, the greater the weight of your vote. The block producer who receives the most votes becomes responsible for validating transactions. This system is more reliable as it democratically selects who can approve transactions. If a block producer fails in their duties, people can withdraw their votes and allocate them to someone else. Once again, you are rewarded for your honesty, which enhances the integrity of the blockchain.

4. Proof of Authority (PoA)

In Proof of Authority (PoA), transactions are only validated by approved nodes. It operates based on reputation, as a strict selection process takes place before one can act as a validator. Identity verification is required, so that participants know exactly which node to trust. Since there are only a small number of nodes, the blockchain becomes less decentralized but more reliable. There is no need for communication between nodes to approve transactions. Both private and public blockchains use Proof of Authority, such as hospitals and insurance offices. This mechanism requires less computational power.

5. Proof of Activity (PoA)

Not to be confused with Proof of Authority (also PoA), Proof of Activity is a combination of Proof of Work and Proof of Stake. This mechanism is used by the blockchains of Decred (DCR) and Espers (ESP). In this Proof of Activity system, the beginning is similar to PoW: nodes can mine blocks by solving a highly complex code using powerful computers with significant computational power. When the nodes believe they have solved the code, it is evaluated by a group of validators. Similar to PoS, these validators are randomly selected. The block is added to the blockchain once the hash is approved. The resulting reward is distributed among the successful miner and the validators who approved the block.

6. Proof of Burn (PoB)

In the Proof of Burn (PoB) mechanism, rewards are based on "burning" tokens. This is done by sending tokens to an "eater address" or "null address." Once burned, the tokens can never be recovered. This is in contrast to Proof of Stake, where you can retrieve your locked tokens at any time. With Proof of Burn, tokens are permanently destroyed, proving that you are willing to sacrifice short-term gains in exchange for the ability to mine new blocks indefinitely. This ensures reliable miners for the blockchain, and the scarcity of tokens increases their demand and value.

7. Proof of History (PoH)

The Proof of History (PoH) consensus mechanism was developed by Solana and operates based on time. It utilizes a specific hash based on past events. It is impossible to claim that the hash was developed earlier, as that would imply that transactions have already occurred, or later, as that would mean earlier transactions were not recorded. This mechanism is also known as a Verifiable Delay Function, as it operates based on previous events to create a SHA256 hashing algorithm output. This output is public and can be verified by anyone, allowing nodes to confirm the accuracy of the Verifiable Delay Function's outcome. Proof of History serves as a timestamp mechanism that verifies the time between transactions without relying on nodes.

8. Proof of Importance (PoI)

In Proof of Importance (PoI), you are selected as a node when you prove that you contribute enough to the blockchain and are therefore important. Everyone is assigned a score based on factors such as network activity, held tokens, and number of transactions. The higher your score, the greater the chance of being chosen as a node to validate future transactions. These nodes can unlock blocks and receive rewards. It is similar to the Proof of Stake (PoS) mechanism, but Proof of Importance takes into account additional factors that contribute to your score, whereas PoS primarily focuses on the amount of tokens held.

9. Proof of Capacity/Proof of Space (PoC/PoSpace)

In the Proof of Capacity (PoC) or Proof of Space (PoSpace) mechanism, having a large amount of storage space on your hard drive is crucial. Instead of constantly guessing hashes and using significant computational power, this mechanism involves storing a long list of possible hashes. The more capacity or space your hard drive has, the greater the likelihood of finding the correct hash. This increases the chances of being a miner with the correct solution and winning the reward. Expensive computers with high computational power are not necessary for this mechanism; only a hard drive with sufficient space is required.

10. Proof of Elapsed Time (PoET)

In Proof of Elapsed Time (PoET), time is the key factor. Each node simply waits for its turn to approve the block. There is no specific order or point system; each node is assigned a waiting time, which is completely random. Once it is your turn as a node, you can mine the block and collect the reward. This waiting time can be short or long. Since the waiting time is randomly assigned, it is fair to everyone. After receiving your reward, you must wait for a certain period of time until it is your turn again. Proof of Elapsed Time is highly efficient and consumes minimal energy.


In addition to the well-known Proof of Work and Proof of Stake, there are several mechanisms to achieve consensus on a blockchain and validate new transactions. It revolves around trust in nodes, whether they work hard or patiently wait for their turn. Together, their task is to keep the blockchain secure and the operations fair. Each consensus mechanism has a unique approach while aiming for the same goal.