Bitcoin is the first cryptocurrency to be launched, and it is also one of the most valuable digital currencies. It has had a notable bull market phase that has drawn even more attention regarding its potential for profit. But it’s worth noting that Bitcoin would not exist in this manner if it wasn’t for the blockchain network. In this article, we cover the importance of the consensus mechanism of the blockchain network and several protocols that helped with the rise of Bitcoin.

What is Blockchain Technology?

Blockchain technology is the decentralized and peer-to-peer-based infrastructure that records and process BTC transactions. The entire network is powered by a cluster of computer systems recognized as nodes. Because this is essentially a public digital and distributed database of transactions, Bitcoin is also a distributed cryptocurrency that isn’t regulated but any external central bank or other authority.

However, in order for the BTC transaction to be processed without the interference of a separate entity, the creator of Bitcoin has developed a blockchain network that relies on the miners as the main users of the network, which are responsible for the validation of the BTC transactions.

More specifically, Bitcoin mining is an essential process in the network, and it is based on the contribution of the miners. They confirm the BTC transactions and obtain block rewards for their investment and effort.

Consensus Mechanism Explained

When it comes to the consensus mechanism, it is actually an important component of the network because, as we said, there isn’t a central authority that can make decisions or any changes without the approval of the other miners. So, thanks to the consensus mechanism, the network remains safe.

Proof of work is an algorithm that is associated with the mining process because it involves finding blocks of transactions, then once a block of transactions has been found, that is notified to the other nodes in the network, and the second part is solving the complex computational puzzle in order to add the block to the network. This is a competitive process because the first miner to solve the puzzle, gains the block reward.

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Otherwise, reaching this consensus in a decentralized system like Bitcoin is crucial because it also prevents double-spending. Double spending is a problem that is associated with virtual currencies, and it happens when one cryptocurrency is used more than one time.

Of course, thanks to the decentralized and secure nature of the blockchain network, this problem has been mitigated. So, whether you want to trade online or become a miner you will you can be confident that the design of the blockchain network is tamper-proof.

Proof of Stake

This is another alternative to proof of work that is implemented by some cryptocurrencies. As a consensus mechanism, the proof of stake is more economical by consuming less energy, and because it doesn’t require so much energy, it costs less than proof of work. However, it has been criticized for promoting saving on cryptocurrencies instead of making crypto transactions.

Final Thoughts

In conclusion, Satoshi Nakamoto has developed a decentralized and secure blockchain technology which is one of the main factors that has contributed to the popularity of Bitcoin and other cryptocurrencies. Thanks to the blockchain network and the consensus mechanism, users can instantly send and receive BTC.