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The New World of Blockchain Economics: Consensus Mechanism as a Core Element

In: Digitalization, Digital Transformation and Sustainability in the Global Economy

Author

Listed:
  • Jona Stinner

    (Witten/Herdecke University)

  • Marcel Tyrell

    (Witten/Herdecke University)

Abstract

A consensus mechanism is at the core of each distributed ledger technology. This paper provides a brief overview of the two most prominent consensus protocols from the blockchain universe, namely proof-of-work and proof-of-stake. We describe the fundamentals from a design perspective, highlight some crucial differences between the protocols and discuss their implications for the validity and security of the blockchain. The paper concludes by pointing to Byzantine-Fault-Tolerance consensus, which in the future may become a promising alternative to established consensus mechanisms.

Suggested Citation

  • Jona Stinner & Marcel Tyrell, 2021. "The New World of Blockchain Economics: Consensus Mechanism as a Core Element," Springer Proceedings in Business and Economics, in: Tim A. Herberger & Jörg J. Dötsch (ed.), Digitalization, Digital Transformation and Sustainability in the Global Economy, pages 9-19, Springer.
    • Handle: RePEc:spr:prbchp:978-3-030-77340-3_2
    DOI: 10.1007/978-3-030-77340-3_2
    as

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