What is a consensus mechanism?

A consensus mechanism is the process by which participants on a blockchain 'agree'. A bit like voting in a parliament. (Did you know that the collective noun for a group of owls is a 'Parliament'?) Consensus is critical to blockchain because it determines how data is added to the database - that is, how the next block is added to the chain and secured by encryption. Different blockchains use different methods to reach consensus - just as there are different ways to vote in a democracy.

For example, a referendum offers everyone a say, while in a representative democracy, voters select representatives who then decide on their behalf. Why is this important to understand? Because the consensus mechanism is an essential component of the more decentralized vision for web3 enabled by blockchain technology. In a decentralised environment, data is not held by one central authority that is subject to attack or corruption. Instead, by enabling varying degrees of decentralised decision-making that users can trust, consensus mechanisms prevent malicious actors from manipulating or corrupting the database, preserving the integrity of the blockchain and the interests of the participants.

Just like a well-functioning parliament.

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