What is a consensus algorithm in blockchain?

Blockchain is one of the most significant technological innovations of the past two decades. A blockchain network is a type of distributed data ledger that is immutable, append-only and protected by cryptographic mechanisms. Blockchains enable a network of participants to store and update records without relying on a central authority, while preserving data integrity and resistance to tampering. 

To achieve these properties, the network must continuously agree on a single, valid version of the ledger of transactions. This shared agreement is known as consensus, and maintaining it is fundamental to the reliability and security of any blockchain system.

In this article, we discuss what a consensus algorithm is, how it functions as part of the broader blockchain process, how decentralized networks achieve consensus and what popular consensus algorithms are currently implemented in the industry.

Key Takeaways:

• Consensus algorithms are critical for blockchain networks. They ensure all nodes agree on a single, tamper-resistant ledger state, resolve conflicts, and prevent issues such as double-spending, thus maintaining trust and integrity within a decentralized system.

• A consensus algorithm is the mechanism that ensures all nodes in a blockchain network agree on the state of the distributed ledger.

• Among the most commonly used consensus algorithms are proof of work, proof of stake, delegated proof of stake, practical Byzantine fault tolerance and proof of authority.