The consensus mechanism is a vital component of blockchain technology. It has been around for quite some time, as a backbone for transactions: ensuring that participants in a blockchain network reach an agreement about the present state of data in the network.

However, little is known of its history and this article will provide a bit of historical insight.

The consensus mechanism was developed to solve the problem of ‘double spending’ common with decentralized systems, preventing fraud and ensuring trustless transactions.

Over the years, different kinds of consensus mechanism algorithms have emerged, with each working based on other principles. Thanks to Bitcoin and Ethereum, Proof of Work and Proof of Stake (PoS) remain the most common consensus mechanisms.

However, the consensus mechanism’s roots are buried deeper than these

In 1997, Adam Back, a prominent British cryptographer proposed the earliest version of the PoW consensus mechanism, Hashcash.

Hashcash is a cryptographic hash-based proof-of-work algorithm that requires much work to compute. Its concept was to limit spam on emails and Internet forums. In 2002, Adam Back described this concept more formally in his paper “Hashcash — A Denial of Service Counter-Measure”.

In this paper, every user must compute a complex equation before sending an email or making forum posts. Back’s logic was that spending more time computing an equation would reduce the number of times a slammer would have, thereby reducing the number of messages.

This is what formed the core (albeit with a more sophisticated implementation) that Satoshi Nakamoto used for Bitcoin’s Proof of Work.

Bitcoin launched in 2009, with Satoshi Nakamoto combining the Hashcash concept with blockchain technology to give better trustworthiness.

He was the first to apply the consensus mechanism concept to the digital currency context, making Bitcoin the first Proof-of-Work digital currency.

Miners have to solve a complex mathematical equation that requires high computational power. Whoever solves the problem can create the next block and receive the reward. This equation is difficult to compute but can be verified easily.

The first miner to solve the problem gets to create the next block and receives a reward for creating that block. Despite scalability concerns, PoW is regarded as the most secure and reliable of all consensus mechanisms.

Today, Bitcoin isn’t the only cryptocurrency using the PoW consensus mechanism. Ethereum, Dogecoin and others use it too.

The PoS consensus mechanism was proposed as an alternative to PoW in 2011. It runs differently from Proof of Work, even though both aim to achieve consensus. PoS was introduced to resolve the commonly-known problems of the Proof of Work.

The PoS consensus mechanism works by buying a stake in the network by depositing tokens. The node with the most coins in the blockchain network is perceived to be interested in maintaining the network and keeping its coin prices high.

Compared to Proof of Work, Proof of Stake is considered more environmentally friendly because it doesn’t depend on high physical resources and infrastructure. Today, PoS together with PoW are the most prevalent consensus mechanisms in blockchain technology.

Finally, Proof of Stake has several variations such as Delegated Proof of Stake (DPoS), Leased Proof of Stake (LPoS), Pure Proof of Stake (PPoS) etc.

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The consensus mechanism is a vital component of blockchain technology. It has been around for quite some time, as a backbone for transactions: ensuring that participants in a blockchain network reach an agreement about the present state of data in the network.

However, little is known of its history and this article will provide a bit of historical insight.

The consensus mechanism was developed to solve the problem of ‘double spending’ common with decentralized systems, preventing fraud and ensuring trustless transactions.

Over the years, different kinds of consensus mechanism algorithms have emerged, with each working based on other principles. Thanks to Bitcoin and Ethereum, Proof of Work and Proof of Stake (PoS) remain the most common consensus mechanisms.

However, the consensus mechanism’s roots are buried deeper than these

In 1997, Adam Back, a prominent British cryptographer proposed the earliest version of the PoW consensus mechanism, Hashcash.

Hashcash is a cryptographic hash-based proof-of-work algorithm that requires much work to compute. Its concept was to limit spam on emails and Internet forums. In 2002, Adam Back described this concept more formally in his paper “Hashcash — A Denial of Service Counter-Measure”.

In this paper, every user must compute a complex equation before sending an email or making forum posts. Back’s logic was that spending more time computing an equation would reduce the number of times a slammer would have, thereby reducing the number of messages.

This is what formed the core (albeit with a more sophisticated implementation) that Satoshi Nakamoto used for Bitcoin’s Proof of Work.

Bitcoin launched in 2009, with Satoshi Nakamoto combining the Hashcash concept with blockchain technology to give better trustworthiness.

He was the first to apply the consensus mechanism concept to the digital currency context, making Bitcoin the first Proof-of-Work digital currency.

Miners have to solve a complex mathematical equation that requires high computational power. Whoever solves the problem can create the next block and receive the reward. This equation is difficult to compute but can be verified easily.

The first miner to solve the problem gets to create the next block and receives a reward for creating that block. Despite scalability concerns, PoW is regarded as the most secure and reliable of all consensus mechanisms.

Today, Bitcoin isn’t the only cryptocurrency using the PoW consensus mechanism. Ethereum, Dogecoin and others use it too.

The PoS consensus mechanism was proposed as an alternative to PoW in 2011. It runs differently from Proof of Work, even though both aim to achieve consensus. PoS was introduced to resolve the commonly-known problems of the Proof of Work.

The PoS consensus mechanism works by buying a stake in the network by depositing tokens. The node with the most coins in the blockchain network is perceived to be interested in maintaining the network and keeping its coin prices high.

Compared to Proof of Work, Proof of Stake is considered more environmentally friendly because it doesn’t depend on high physical resources and infrastructure. Today, PoS together with PoW are the most prevalent consensus mechanisms in blockchain technology.

Finally, Proof of Stake has several variations such as Delegated Proof of Stake (DPoS), Leased Proof of Stake (LPoS), Pure Proof of Stake (PPoS) etc.

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