Trading glossaryReviewed 16 July 2026
Definition
A consensus mechanism is the protocol process by which distributed participants agree on valid ledger updates and the ordering or finality of transactions.
In market context
The mechanism defines who can propose records, how other participants verify them, and what economic or computational cost discourages conflicting histories. Proof of work and proof of stake use different resources and incentive structures, while permissioned ledgers may rely on identified validators. Consensus secures agreement under stated assumptions; it does not verify off-chain facts, prevent every software defect, or guarantee that a token retains value.
Source
Use the primary source for fuller regulatory or market context.