What Is “Nakamoto Consensus” and How Does PoW Enable It?
Nakamoto Consensus is the combination of Proof-of-Work, the longest chain rule, and the difficulty adjustment mechanism that allows a decentralized network of untrusting parties to agree on a single, canonical transaction history. PoW enables it by providing a measurable, costly signal of honest effort, ensuring that the chain with the most cumulative work (the longest chain) is the one accepted as valid by the entire network.
Glossar
Block Reward
Incentive ⎊ A block reward serves as the primary economic incentive for miners or validators to participate in securing a blockchain network.
Cumulative Work
Metric ⎊ Cumulative work is the quantifiable metric in Proof-of-Work blockchains representing the total computational effort expended by miners to produce the entire chain from the genesis block to the current block height.
Longest Chain
Consensus ⎊ The longest chain rule is the core mechanism for achieving consensus in Proof-of-Work systems like Bitcoin.
Nakamoto
Genesis ⎊ The pseudonym most famously associated with the creation and initial development of Bitcoin, Nakamoto remains an enigma within the cryptocurrency landscape.
Nakamoto Consensus
Foundation ⎊ Nakamoto Consensus represents a probabilistic finality mechanism intrinsic to permissionless blockchain systems, notably Bitcoin, resolving the Byzantine Generals’ Problem without reliance on central authorities.
Difficulty Adjustment Mechanism
Algorithm ⎊ Difficulty Adjustment Mechanisms represent a core tenet of blockchain protocol design, dynamically modulating mining or validation difficulty to maintain consistent block times despite fluctuating network hashrate.