If you’ve ever paid with cryptocurrency, you probably have heard someone tell you that “the blockchain approves the transaction”.
What does that mean?
Think about today — you use your Visa credit card at the store, it takes a few seconds, and then the transaction is confirmed by Visa and you now own the physical good.
Take that analogy and apply it to blockchain — you use your cryptocurrency at the store, it takes a few seconds, and then the transaction is confirmed by “the blockchain” and you now own the physical good.
In the first scenario, you have a centralized entity using their own systems to validate the transaction. In the second scenario, you have a decentralized network somehow validating the transaction. This is what I want to talk about today.
The process whereby the decentralized network is somehow validating the transaction is part of blockchain consensus and is handled by node validators.
Blockchains are distributed networks with many unknown parties. Whereby Visa makes its own “decisions”, a blockchain network requires many disparate parties to agree on a “decision”. Consensus is the process by which these different parties agree and confirm transactions.
As a side note, there is a wide variety of consensus mechanisms (proof-of-work, proof-of-stake, proof-of-authority, etc.), but that’s not the point of today’s article — we’ll leave that for a future article.
Going back to the analogy, in this blockchain consensus process:
- A node validator is algorithmically chosen to perform some type of automated computation
- The node validator checks the specifics of the transaction and ensures all rules and formatting is followed
- The node validator then validates the transaction
- Once they validate, the other validating nodes on the network need to verify the original validation
- If all is successful, the transaction is recorded on the blockchain
You may be thinking — that seems like a lot!
However, it’s really not — it’s incredibly automated and most blockchain networks are comparable in speed to how fast Visa confirms your transaction. It’s quite a beautiful process, really.
You, as the end user, honestly will never see this process, and that’s okay. Yet, I think it’s an important process to understand as it is at the core of what makes blockchains work and serve as trusted distributed networks. Node validators are one of, if not the most, important participants in a blockchain network.
In future articles, I’ll cover how these validators are actually run, some of the major companies behind them, and why you might want to run one yourself.
Hope this was a nice refresher on the core principles of blockchain!
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