Bitcoin primarily uses a Proof-of-Work (PoW) consensus algorithm. This mechanism involves miners solving complex mathematical problems to validate transactions and add new blocks to the blockchain. The miner who successfully solves the problem is rewarded with newly issued bitcoins and transaction fees.
Elaboration:
PoW Explained:
In PoW, network participants compete to solve a computationally intensive puzzle. This process, known as mining, requires significant resources, including specialized hardware, electricity, and time.
Bitcoin's Security:
The difficulty of the PoW problem is adjusted periodically to maintain a consistent block-mining rate, typically around 10 minutes.
Rewards:
The successful miner receives a block reward and transaction fees from the transactions included in the block.
Other Consensus Mechanisms:
While PoW is the dominant consensus algorithm in Bitcoin, other mechanisms like Proof-of-Stake (PoS) are used in other cryptocurrencies and blockchain projects. PoS, for example, is used by Ethereum, which is transitioning from PoW to PoS.
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