How Blockchain Consensus Works

Proof of work, proof of stake and the security assumptions behind each, explained without jargon.

The problem consensus solves

A distributed ledger must agree on one history without a trusted referee. Consensus mechanisms make dishonesty economically irrational rather than technically impossible.

Proof of work

Miners spend energy to propose blocks. Rewriting history requires re-spending that energy, which makes deep reorganisations prohibitively expensive.

Proof of stake

Validators post capital as collateral and lose it for misbehaviour. Security scales with the value staked and the cost of acquiring it.

Key takeaways

• The problem consensus solves: A distributed ledger must agree on one history without a trusted referee.
• Proof of work: Miners spend energy to propose blocks.
• Proof of stake: Validators post capital as collateral and lose it for misbehaviour.

Risk disclosure

This article is educational content published by Vaultero Capital and is not investment advice, a recommendation, or an offer to buy or sell any asset. Digital assets are highly volatile and you may lose some or all of the capital you commit. Projected or historical returns are not a reliable indicator of future performance. Consider your objectives, time horizon and tolerance for loss, and seek independent professional advice where appropriate. Full terms are set out in our risk disclosure.