Permissionless Consensus

Any participant with the requisite hardware and internet connection can join the network as a validator or miner without seeking approval. This is the foundational property that enables decentralization and distinguishes it from permissioned or private blockchains.

• No Gatekeepers: No central entity controls who can propose or validate blocks.
• Global Access: Enables a geographically distributed and diverse set of operators.
• Example: In Bitcoin's Proof-of-Work, anyone can run a mining node; in Ethereum's Proof-of-Stake, anyone with 32 ETH can become a validator.

The network is designed to be neutral, making it economically and technically infeasible for any entity to prevent valid transactions from being included in the blockchain. This is a direct consequence of open participation and decentralized block production.

• Transaction Inclusion: No single validator can reliably block a transaction that follows protocol rules.
• Sybil Resistance: The consensus mechanism (e.g., Proof-of-Work, Proof-of-Stake) makes it costly to attack the network, protecting its neutrality.
• Core Value Proposition: Essential for applications requiring credible neutrality, like decentralized finance (DeFi) and uncensorable communication.

Network security is not provided by a trusted third party but emerges from the economic incentives and cryptographic proofs of a distributed validator set. The security model is cryptoeconomic, combining cryptography with game theory.

• Stake-at-Risk: Validators must commit a valuable resource (computational power in PoW, staked assets in PoS) that can be slashed or lost for malicious behavior.
• Byzantine Fault Tolerance (BFT): Protocols are designed to reach agreement even if some participants are faulty or adversarial.
• Security Budget: The cost to attack the network (e.g., 51% attack) is meant to exceed the potential profit.

A core technical component that prevents a single entity from creating many fake identities (Sybils) to gain disproportionate influence over the consensus process. The mechanism ties influence to a scarce, verifiable resource.

• Proof-of-Work (PoW): Uses computational power (hashrate) as the scarce resource. More hashrate equals higher probability of mining the next block.
• Proof-of-Stake (PoS): Uses staked cryptocurrency as the scarce resource. Validator weight is proportional to the amount of stake.
• Purpose: Ensures the "one-cpu-one-vote" or "one-stake-one-vote" ideal, preventing low-cost attacks on consensus.

The property that once a block is added to the canonical chain, reversing it becomes prohibitively expensive, providing strong assurances of settlement. The type of finality varies by consensus model.

• Probabilistic Finality (PoW): In Bitcoin, confidence a block is final increases as more blocks are built on top of it. A reorganization becomes exponentially less likely.
• Absolute Finality (PoS/BFT): In protocols like Ethereum's Casper FFG, a block is finalized by a supermajority of validators and can only be reverted by burning at least one-third of the total staked ETH, making it cryptoeconomically irreversible.

The deterministic algorithm all honest nodes follow to select the canonical chain when the network experiences temporary forks (competing versions of the blockchain). This rule is critical for maintaining a single, shared state.

• Longest Chain Rule (Nakamoto Consensus): Used in Bitcoin PoW. Nodes adopt the chain with the most cumulative Proof-of-Work (highest total difficulty).
• GHOST / Greediest Heaviest Observed SubTree: Variants used in some PoW/PoS chains to account for uncle blocks and improve security.
• LMD-GHOST + Casper FFG: Ethereum's hybrid rule, combining a fork choice for block proposal with a finality gadget for checkpoint finalization.

A 51% attack occurs when a single entity gains control of the majority of a network's hashing power (Proof of Work) or staked tokens (Proof of Stake), allowing them to double-spend coins and censor transactions. This is the primary security model for Nakamoto Consensus. The attack is theoretically possible but becomes economically prohibitive as the network's total hash rate or total value staked grows. The security is probabilistic, not absolute.

A theoretical flaw in early Proof of Stake designs where validators have no cost to validate on multiple competing blockchain forks, as staking is virtual. This could lead to consensus instability. Modern PoS systems mitigate this through slashing penalties, where a validator's staked assets are destroyed if they are caught validating conflicting blocks, making malicious behavior economically irrational.

A class of attacks specific to Proof of Stake where an attacker acquires old private keys (which may be cheap) to rewrite history from a point far in the past. Defenses include weak subjectivity checkpoints, where clients rely on a recent trusted state, and bonding periods that delay withdrawal of staked funds, limiting the economic viability of such attacks.

The core trade-off posits that a blockchain can only optimize for two of the following three properties at once:

• Decentralization: Many independent participants.
• Security: Resistance to attack.
• Scalability: High transaction throughput. Permissionless blockchains often prioritize decentralization and security, accepting lower throughput. Layer 2 solutions (e.g., rollups, sidechains) and sharding are attempts to break this trilemma.

• Probabilistic Finality (e.g., Bitcoin): A block's confirmation becomes exponentially more secure with each subsequent block, but reversal is always theoretically possible.
• Economic Finality (e.g., Ethereum PoS): Validators explicitly finalize blocks through voting. Reversing a finalized block requires attackers to destroy at least one-third of the total staked ETH, making it economically catastrophic and thus practically immutable. This represents a key security trade-off in consensus design.

Despite permissionless entry, operational realities can lead to centralization:

• Proof of Work: Concentration of mining power in large pools and specific geographic regions with cheap electricity.
• Proof of Stake: Concentration of stake in large custodians (exchanges, staking services) and wealthy entities. This reduces censorship resistance and increases systemic risk if a few large actors collude or are compromised.

A property of a distributed system that allows it to reach consensus even when some participants are faulty or malicious (Byzantine nodes). Practical BFT (PBFT) and its derivatives are core to many permissioned blockchain consensus algorithms. In permissionless contexts, PoW and PoS are designed to achieve Sybil resistance and economic BFT, where attacking the network is financially irrational rather than computationally impossible.

The specific consensus protocol introduced by Satoshi Nakamoto for Bitcoin. It combines Proof of Work with the longest-chain rule to achieve eventual consistency in a permissionless, peer-to-peer network. Nodes always consider the chain with the greatest cumulative proof-of-work difficulty to be the valid one. This elegantly solves the double-spend problem without requiring identity or a trusted third party.

A potential vulnerability in Proof of Work and some Proof of Stake systems where a single entity gains control of the majority of the network's hashing power (PoW) or staked assets (PoS). This control could allow them to:

• Censor transactions
• Double-spend coins
• Prevent other miners/validators from adding blocks The high economic cost to execute such an attack is a key security assumption of permissionless consensus.

The ability of a network to defend against Sybil attacks, where an attacker creates a large number of pseudonymous identities to gain disproportionate influence. Permissionless consensus mechanisms achieve this by attaching a real-world cost to participation:

• PoW: Cost of electricity and hardware.
• PoS: Cost of acquiring and staking native tokens. This cost makes it economically unfeasible to control a majority of the network's consensus power.