Foundations of Blockchain Technology

Consensus mechanisms solve the fundamental problem of coordinating a distributed network where participants may be malicious, offline, or have network delays. Proof of Work requires miners to solve computationally expensive puzzles, making it economically costly to attack the network—an attacker would need to control more than 50% of the network's computational power. Proof of Stake replaces computation with economic stake, where validators lock assets that can be confiscated if they misbehave. Both systems use fork-choice rules to ensure network convergence—when forks occur (multiple valid blocks at the same height), nodes follow a deterministic rule to select which chain to extend. The longest-chain rule in PoW means that honest miners will naturally extend the chain with the most accumulated work, while PoS systems use more sophisticated rules like LMD-GHOST that consider validator attestations. Finality represents the point at which a transaction is considered irreversible. In PoW, finality is probabilistic—each block added makes reorganization exponentially less likely. PoS systems can achieve stronger finality guarantees through slashing mechanisms that economically penalize validators who attempt to reverse finalized blocks.