Understanding Blockchain

Consensus
Blockchain consensus is the mechanism by which all nodes in a distributed
network agree on the current state of the blockchain. It ensures the integrity and
security of the network.
Consensus Mechanisms
1 Proof of Work (PoW)
Requires miners to solve complex mathematical puzzles to validate transactions and
create new blocks.

2 Proof of Stake (PoS)

Validators are chosen to create new blocks based on the number of coins they hold
and are willing to "stake" as collateral.

3 Delegated Proof of Stake (DPoS)

Token holders vote for delegates who are tasked with validating transactions and
creating new blocks.
Why It Is Being Used

1 Immutability 2 Trustless Transactions

Ensures that once data is recorded on the Eliminates the need for trust in
blockchain, it cannot be altered or intermediaries, making transactions
deleted. more secure and transparent.

3 Decentralization 4 Security
Enables a distributed network to operate Protects against unauthorized changes,
without a central authority or single fraud, and cyber-attacks.
point of control.

5 Fault Tolerance
Even if some nodes fail or behave maliciously, the system continues to function correctly
due to consensus.
Challenges and Trade-Offs
Scalability Energy Consumption Centralization Risks

As blockchain networks Proof of Work protocols In some consensus

grow, scalability becomes a require substantial energy mechanisms, there is a risk
major concern to handle for mining, raising of wealth concentration
increased transaction environmental concerns. leading to centralization.
volumes.
Practical Applications

Supply Chain Financial Services Voting Systems

Management
Facilitates rapid, secure, Implementing blockchain
Enhances transparency, and low-cost cross-border in voting systems can
traceability, and transactions and enhance transparency,
authenticity of products settlements. security, and reduce the
through the entire supply risk of tampering in
chain. elections
Interactive Workflow Example
Transaction Initiation
Users initiate blockchain
transactions using a digital
wallet or integrated system.
Confirmation &
Validation
The transaction details are
validated by the network's
consensus mechanism.
Block Creation
Valid transactions are
grouped into blocks and
added to the blockchain.
Alternatives to Blockchain

• Hashgraph
• Tangle
• Holochain
• Hyperledger Fabric