How Does a Blockchain Network Reach Consensus on the Outcome of a Smart Contract?
A blockchain network reaches consensus on the outcome of a smart contract through a consensus mechanism, such as Proof-of-Work (PoW) or Proof-of-Stake (PoS). When a smart contract is executed, the transaction is broadcast to the network.
Nodes (or validators) on the network independently execute the contract's code and compute the result. The consensus mechanism ensures that all honest nodes agree on the correct result and the new state of the blockchain.
This agreed-upon result is then added to a new block, making it a permanent and verifiable part of the ledger.
Glossar
Honest Nodes
Verification ⎊ Honest Nodes, within decentralized systems, represent participants actively engaged in validating transactions and maintaining network consensus, crucial for ensuring data integrity and preventing malicious activity.
Network Latency
Propagation ⎊ Network latency, within cryptocurrency, options trading, and financial derivatives, represents the time delay for data transmission across a network, critically impacting trade execution speeds and arbitrage opportunities.