An Overview of Cryptocurrency Consensus Algorithms

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As explained by TechTarget, “A consensus algorithm is a process in computer science used to achieve agreement on a single data value among distributed processes or systems. Consensus algorithms are designed to achieve reliability in a network involving multiple unreliable nodes. Solving that issue — known as the consensus problem — is important in distributed computing and multi-agent systems. To accommodate this reality, consensus algorithms necessarily assume that some processes and systems will be unavailable and that some communications will be lost. As a result, consensus algorithms must be fault-tolerant. They typically assume, for example, that only a portion of nodes will respond but require a response from that portion, such as 51%, at a minimum.”

In the context of cryptocurrencies, consensus algorithms are designed to ensure that transactions are valid and distributed across many participants to verify accuracy and resiliency through redundancy.

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