The last few Future Friday’s, I’ve focused on Web 3. I explored how the blockchain is paving the way for a decentralized networks, and how those networks can be developed and governed using crypto tokens as incentives.

Today I want to cover some details of how data is transmitted and how people reach agreement within a decentralized world using Blockchains.

In order for a decentralized world to work, there needs to be a few elements in place:

Both of these are solved by cryptography.

Peer to peer messaging is done using public-key cryptography and digital signatures. Public Key Cryptography is a cryptographic system that relies on a pair of keys, a secret private key and an ‘open’ public key which is broadcasted out to the network. This system helps ensure the authenticity and integrity of a message by relying on advanced cryptographic techniques. (source)

Agreement on the validity of transaction is done using a consensus algorithm agreed to by all members of the blockchain. This consensus algorithm is used to validate transactions on the chain without needing a central party. There are two forms of conensus (source):

Some of most common consensus algorithms being used by different blockchains today are Proof of Work (used by Bitcoin), and Proof of Stake.

This is a great article summarizing some of the most common consensus algorithms.

From Web 3 Consensus Mechanisms on the importance of consensus mechanisms.

Consensus mechanisms are a integral to blockchain technology and other distributed systems. They are the basis on which participants of a given network with a range of varied self-interests, and even a mutual distrust for one another, can come to an agreement on the validity of data and transactions. The consensus model implemented by a project, company or team is the heart of its security, communication, and sustainability.