Nakamoto Consensus
Consensus is the process of the nodes on a blockchain arriving at an agreement on what the current state of the network is. Nakamoto Consensus is the set of rules governing this process for Bitcoin. Proposed initially by Satoshi as a solution to the Byzantine General’s Problem.
Two main rules form the foundation of Nakamoto Consensus:
- Always use the longest history.
- Appending to this history requires proof a non-trivial amount of work has been completed relative to the network’s current capacity.
Ensuring the blockchain is secure when at least 51% of the network’s hash power is controlled by honest nodes. Nodes are incentivized to act honestly competing for the block reward. Awarded to the validator discovering the nonce solving the cryptographic puzzle of Bitcoin’s proof of work algorithm.
Solving the puzzle earns the validator the right to propose a new block for the blockchain.
Honest nodes are incentivized to recognize this block as a valid one.
To maximize their eligibility for the next reward based on adding this block to the current chain. Since only puzzles solved for blocks on the longest chain receive rewards.
Further Reading Nakamoto Consensus
The Nakamoto Consensus Algorithm