The New World of Blockchain Economics: Consensus Mechanism as a Core Element

Jona Stinner () and Marcel Tyrell ()
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Jona Stinner: Witten/Herdecke University
Marcel Tyrell: Witten/Herdecke University

A chapter in Digitalization, Digital Transformation and Sustainability in the Global Economy, 2021, pp 9-19 from Springer

Abstract: Abstract A consensus mechanism is at the core of each distributed ledger technology. This paper provides a brief overview of the two most prominent consensus protocols from the blockchain universe, namely proof-of-work and proof-of-stake. We describe the fundamentals from a design perspective, highlight some crucial differences between the protocols and discuss their implications for the validity and security of the blockchain. The paper concludes by pointing to Byzantine-Fault-Tolerance consensus, which in the future may become a promising alternative to established consensus mechanisms.

Keywords: Cryptocurrency; Proof-of-work (PoW); Proof-of-stake (PoS); Byzantine fault tolerance (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:spr:prbchp:978-3-030-77340-3_2

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DOI: 10.1007/978-3-030-77340-3_2

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