What: Nakamoto Consensus is a set of rules for verifying Bitcoin transactions.
Why: Consensus decides which blocks make it into Bitcoin’s ledger. It is consists of: A) Proof of Work and B) Block Selection.
A) Proof of Work (POW): this is a process where miners compete with each other to validate transactions by solving a complicated math puzzle. Miners compete with each other to produce a new block and win the block reward for solving the puzzle. Proof of work ensures that the Bitcoin network automatically agrees to the current state of the ledger holding all transactions.
B) Block Selection: the first announced block containing the solved puzzle is considered valid; and all other miners must start searching for a new block to solve.« Back to Glossary Index