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Consensus Algorithms

Definition

Consensus algorithms are the fundamental rules governing how distributed ledger systems agree on the validity of transactions and the state of the ledger. These protocols ensure that all participants in a network reach a common understanding without relying on a central authority. Examples include Proof-of-Work and Proof-of-Stake, each with distinct mechanisms for achieving distributed agreement and securing the network against malicious actors. The selection and implementation of a consensus algorithm significantly influence a blockchain’s performance, scalability, and security characteristics.