Consensus Mechanisms: What are They and Why Do We Need Them?

If you’ve spent any time researching cryptocurrencies then you’re sure to have come across the terms Proof of Work and Proof of Stake. These are what are known as consensus mechanisms.

Different blockchains use different consensus mechanisms. Most notably, Bitcoin uses Proof of Work (PoW), while Ethereum uses Proof of Stake (PoS). But what do these terms mean and how are they different? If you’ve asked yourself these questions before, then you’re in the right place. In this article, we’ll break down key consensus mechanism concepts. By the time you finish reading, you’ll be able to explain the difference between PoW and PoS, and gain a better understanding of blockchain in general. Let’s get to it.

Key Points

  • Consensus mechanisms are any procedure used to get consensus (agreement, trust, security) among a decentralized network
  • Concerning crypto and blockchain, Proof of Work and Proof of Stake are the main consensus mechanisms
  • Mining critics argue that Proof of Work is too energy expensive

Why Do We Need Consensus Mechanisms?

Consensus Mechanisms are used by blockchains to achieve consensus, but what does that mean exactly? Consensus means that all nodes in the network can agree on the same values, trust one another, and know that their platform is secure. As with cryptocurrencies on blockchains.

In centralized networks, a central authority is responsible for the network’s authenticity, security, and trustworthiness. They perform tasks like updating ledgers and verifying transactions.

Blockchains are decentralized networks that function without a central authority. They are made up of thousands of nodes worldwide that together authenticate and verify transactions on the blockchain. These nodes need a reliable, secure way to make sure that all transactions are legitimate and that everyone can agree on them. This job is performed by the consensus mechanism, which evaluates each blockchain transaction by a set of agreed-upon rules.

What is Proof of Work?

Proof of Work (PoW), is a popular consensus mechanism used by Bitcoin. In this protocol, nodes compete with each other to solve a complex computational problem. The node to solve it first correctly earns the right to be added to the blockchain. This process is called mining.

PoW requires high computational power, best demonstrated in mining farms. Mining farms are data centers specially equipped to solve such complex problems faster. However, as these farms compete with one another, they require more energy and financial resources. This ends up wasting valuable resources that could be better used elsewhere. This is critics’ major problem with PoW protocols like Bitcoin.

What is Proof of Stake?

The idea is to use “staking” as a way to determine which node gets the right to extract the next block. In the Proof of Stake approach, the nodes also try to choose the data in search of a result less than a certain value. In this case, the complexity is distributed proportionally according to the node balance. In other words, according to the number of coins (tokens) on the user’s account.

So, a node with a large balance is more likely to generate the next block. The method is preferable because of its small computing requirements.


As you have read, PoW and PoS are currently the main consensus protocols for blockchain and cryptocurrencies. Although PoW has its faults, high energy expenditure, it continues to be widely used in the crypto world. Alternatives like PoS provide the same benefits as PoW but without the high energy costs. is a decentralized cross chain platform operating on the PoS mechanism. We have liquidity pools on both Ethereum and Binance Smart Chain, where users can stake and earn passive income. If you’re interested in learning more about staking, head over to our website.




bRing is a decentralized cross-chain platform, enabling farming of multiple tokens via staking of a single coin.

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bRing is a decentralized cross-chain platform, enabling farming of multiple tokens via staking of a single coin.

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