What Is ‘Nakamoto Consensus’?
Nakamoto Consensus is the combination of Proof-of-Work, the longest chain rule, and the difficulty adjustment algorithm that allows a decentralized network of nodes to agree on the state of the ledger without a central authority. It is the mechanism that ensures all participants converge on a single, shared history of transactions, securing the Bitcoin network.
Glossar
Shared History
Provenance ⎊ Shared History, within cryptocurrency, options, and derivatives, signifies the traceable origin and evolution of a financial instrument or market state, crucial for assessing systemic risk and validating model assumptions.
Difficulty Adjustment Algorithm
Algorithm ⎊ The Difficulty Adjustment Algorithm (DAA) is a core mechanism within proof-of-work (PoW) cryptocurrency blockchains, primarily designed to maintain a consistent block generation rate irrespective of fluctuating network hashrate.
Decentralized Network
Architecture ⎊ Decentralized Network describes a system where computational nodes are distributed geographically and organizationally, ensuring no single entity has unilateral control over data validation or transaction processing.