« Back to Glossary Index

A fundamental problem in distributed computing is to achieve overall system reliability in the presence of a number of faulty processes. This often requires processes to agree on some data value that is needed during computation. The consensus problem requires agreement among a number of processes for a single data value. Some of the processes may fail or be unreliable in other ways, so consensus protocols must be fault tolerant. The processes must somehow put forth their candidate values, communicate with one another, and agree on a single consensus value. The bitcoin blockchain uses electricity to ensure the security of the system. It creates an economic system where you can only participate by incurring costs, Proof of work (POW). You do that for the possibility of reward/bitcoin. If you spend money, and you play fair by the rules, you get money back. If you cheat, you lose money. It doesn’t pay to cheat. This simple game theoretical equilibrium is the core of the bitcoin consensus algorithm.

« Back to Glossary Index