The network layer determines how transactions and ledger pages (i.e., blocks) are transmitted within the blockchain system. The consensus layer ensures that all accountants in the network maintain consistent ledgers, meaning that all transactions have a consistent order and that there is complete consistency. The consensus mechanism must solve three main problems: what transactions will be included in the next block, who will generate the next block, and when the next block will be generated.
The most commonly used consensus algorithm in the blockchain is Proof of Work (PoW). PoW requires users to perform computationally intensive operations to prove that they have done a certain amount of work. PoW is based on the idea that the work required to create a block serves as a guarantee that the resources used are genuine and needed. PoW is commonly implemented using hash functions, which produce a fixed output from an arbitrary input but cannot be reversed to determine the input from the output.
To implement PoW, a message is hashed, and then a nonce value is added to it to calculate a new hash. This process is repeated with different nonce values until a hash with a certain feature, such as a specific number of leading zeros, is obtained. This process is computationally intensive, and the more strict the requirements are, the more times it needs to be repeated. However, the hash obtained by the user can be easily verified by the network.
The Characteristics of Blockchain Technology: A Decentralized System without a Specific Entity. Blockchain technology is a decentralized global system that is connected by P2P networks and has no specific entity. This feature poses significant challenges to regulation. The current state of the blockchain industry is chaotic and requires regulatory intervention to promote healthy development. However, regulatory measures should avoid being too strict and hindering the growth of the blockchain industry.