Nakamoto Consensus

Nakamoto Consensus refers to both a particular family of consensus protocols and the specific protocol used by Bitcoin and is generally associated with Proof of Work blockchains, such as Bitcoin. Its name is derived from the Bitcoin creator’s pseudonym, Satoshi Nakamoto. Nakamoto Consensus states that the longest chain of blocks existing within a network of nodes is valid, and all others are to be ‘orphaned.’ In essence, nodes on the network implicitly vote on the most valid chain by adding blocks to it; thus, the longest chain is the one approved by the majority of nodes.

A common misconception is that Proof of Work is, in and of itself, a consensus mechanism. In reality, Proof of Work is merely a mechanism by which blockchains, usually employing Nakamoto Consensus, are secured. The randomization and costs (electricity, time, etc.) inherent in generating a nonce necessary to create and propagate a block make it theoretically unfeasible to spam the network with invalid blocks or launch a Sybil or Distributed Denial of Service (DDoS) attack. Thus, this act of ‘mining’ does not achieve consensus but instead introduces barriers to block production that eases consensus achievement by hindering the submission of potentially invalid or malicious blocks to the network. Although Nakamoto Consensus is usually associated with Proof of Work, blockchains can, in theory, use Nakamoto Consensus with other proof methods, such as Proof of Stake, and vice versa blockchains using proof methods such as Proof of Stake can use Nakamoto Consensus.