You were very brave clicking that link! Don't worry, I will be gentle. Look! I have rewarded you already with a cute puppy (who can resist a puppy!). Ok, ok, I did spend an hour looking at puppy pics, but it was in the name of research, dammit!
Let's just rip the band-aid off and dive straight in.
What is a blockchain?
A block chain is the method in which cryptos achieve decentralisation. Records (transactions and other details) get bundled together, called blocks. Each block has a code included in it that references the previous block, which keeps all the blocks in a chain. The data in any given block cannot be altered without the alteration of all blocks that occurred after the block, essentially making it impossible to maliciously alter the data, as making such an alteration would require the cooperation of the majority of the network. It is this arrangement that makes the network secure.
What is consensus?
Consensus is a process where multiple nodes (fancy word for 'someone's computer') agree that the data in a block, and in the chain, is correct. This is an important part of the security of the network as this is a double check that the data on the blockchain is the true data.
There are a variety of methods a blockchain can adopt including:
* Proof of Work (PoW)
* Proof of Stake (PoS)
* Delegated Proof of Stake (dPoS)
* Leased Proof of Stake (LPoS);
* Proof of Importance (PoI)
* Delegated Byzantine Fault Tolerance (dBFT)
* So many more...
I won't go into the details of each type (we will be here all day!), but I will touch on the two most common, Proof of Work and Proof of Stake.
Proof of Work (aka Mining)
This is first type and the most common method.
In order to complete a block (chunk of data) the node (someones computer) has to figure out a very complex math problem. The complexity ensures that the computer has to use a lot of electricity. The electricity use (and ultimately the paying of the electricity) is the cost of being a node. When the node figures out the math problem, the node is rewarded with some cyrptocurrency. This is called a block reward.
If a node (called a miner in this type of consensus) gets a different answer from other miners, then their answer is rejected. A rejection is a waste of electricity, so there is an incentive for the answer to be in line with other miners. In this type of consensus, in order to cheat the system you would need to control 51% of the computing power on the network, which is so difficult it is basically impossible.
In this system the more computing power you have, the more likely you are the solve the math problem first, and so get the block reward. Because of this, many nodes join their resources together (called a mining pool) so that individual nodes get a more consistent reward.
When too many computers join the network, and the math problems get solved quicker and quicker. This is a problem because this can interfere with the stability and security of the network. To combat this, the difficulty of the problem is increased so that the number of blocks created on the network remains consistent. This difficulty is called Block Difficulty.
Proof of Stake (PoS)
In this method, a node is not required to solve any math problems. Instead one node is chosen to process the transactions and other nodes are chosen to verify the transactions. In order to be chosen the node is required to provide a stake of currency. This stake is locked up in a virtual safe, and if anomalies are detected from the node, the stake is forfeited. The reward for this work is a percentage of stake, so the more currency you stake, the more likely you are to be chosen to process a block. This means you get a bigger reward, but you also risk more currency if you try to cheat.
Now, obviously, the reality of blockchains and concensus is way more complicated than I have explained, so if you want some more technical detail, wikipedia is a great resource. Wikipedia on Blockchains or WikiPedia on CryptoCurrency.
Continue your journey by checking out these articles next: