Understanding the Blockchain Algorithm: What should you know?

Blockchain technology is a peer-to-peer network and is slowly being preferred by more and more people every day due to its transparent, immutable, and secured traits. However, it may sound very easy but technically speaking, the task is difficult to achieve. The fact that it is completely decentralized with no one governing the network, makes it a bit complex. In this article, we are going to discuss the blockchain algorithm – that makes the working of crypto in a blockchain network possible.  

The Blockchain Algorithm 

Since a lot of processes are going on in blockchain transactions, things can get complicated easily. With large volumes of data adding up to a network, transparency must be maintained thoroughly. The truth value of every transaction needs to be determined and threats by which the parity of the network might get affected must be kept in check. It is here that the blockchain algorithm comes into the picture.

So a blockchain algorithm typically means the arrangement in which a single data value is verified and agreed upon by the entire computer network. The keyword is consensus by all the nodes on the real-time data that gets updated on the ledger and the unknown peers that enter the network. 

The two main types of blockchain algorithms

  • PoW

The oldest algorithm in practice, the full form of PoW is the Proof of Work consensus mechanism. In very simple terms, PoW is what mining is. It has revolutionized the idea of any kind of transaction in almost all industries. 

  • PoS

Proof of Stake appeared as a healthy substitute to the PoW protocol. In this case, miners put in their stake to create a new block in the network, and are not rewarded with new coins but are allowed to keep transaction fees concerning a particular transaction. 

What will the ideal blockchain algorithm offer? 

  • Security 

A blockchain network with the ideal algorithm will secure the blockchain system and prevent any malware or double-spending. All nodes will work following the set protocols. 

  • Democracy

A good algorithm will possibly not leave out any node when it comes to voting or coming to an agreement. The more nodes participate, the more inclusive the network becomes. 

  • Equality

All votes and views about databases and other technicalities inside a network are equal. For an ideal development process, consensus as far as participating nodes are concerned is important. 

Failure of a good consensus algorithm

Starting from trading your cryptocurrency in software like or investing in crypto to the basic use cases of the blockchain system, like in firms and industries, everything depends on a smooth blockchain algorithm. A crash in the normalcy of a network due to failure in the consensus algorithm can give rise to the following instances :

  • Forks

While blockchain forks in select circumstances might turn out to be beneficial, but usually situations initially become haywire when there is a fork. A fork is when an existing blockchain network splits into two or more divergences giving rise to new complications. 

  • Disappointing performance

A result of a faulty blockchain algorithm is often poor performance of the entire network. Problems in the algorithm can lead to malfunctioning the blockchain, dumbing down its unique features like speedy and secured transactions. The application might behave unpredictably in that case. 

  • Unanimity failure 

A bad blockchain algorithm will invariably fall short of acquiring total consensus from all the nodes that are present in the network. This will again lead to an absence of participation and finally undesired and inaccurate results. If every decision is not taken unanimously, there is no congruity in the network. 


All that we have just discussed leads us to a common ground of necessity for consensus which can only be achieved by the best Blockchain Algorithm. It is practically impossible to coin a particular model to be the best one but seeing blockchain algorithms evolve throughout time is rather interesting. 


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