NFTs are a cool thing to own, trade, and sell. Collectors spend thousands of dollars to buy these non-fungible tokens that act as a certificate of ownership. But before you go on to spend your hard-earned money on funky Doodles NFTs, have you ever wondered how these non-fungible transactions are verified? If you want to sail the NFT ship, you have to grasp the basics of how they are written and coded inside the blockchain. This article will guide you through the blockchain validation mining process, how NFT transactions are verified, and consensus mechanisms.
Blockchain Transactions
Before we explain the validation process of the blockchain, we have to go over how blockchain transactions work. The blockchain is a decentralized ledger that is distributed among a network of peer-to-peer computers. Moreover, it is a string of code blocks linked together to form a chain of data. These blocks consist of grouped information and have storage capacity. Once these blocks are filled, they become closed and linked to the previous block. And thus, all new information will add to new blocks that link back to the blockchain. The information inside the crypto blockchains is usually monetary transactions. But who adds these blocks? Whoever controls a network node on the blockchain, known as a miner or a validator, can add a transaction block to the rest of the chain.
The blockchain’s aim is to record and distribute data but doesn’t allow the alteration of these data. That’s why the blockchain is an immutable ledger or record of transactions. The appeal of the blockchain is that it functions as a decentralized peer-to-peer network that eliminates the need for a middleman. However, if there are no central organizations that manage the blockchain, and if anyone with a network node can add a block, how do we know that these transactions are legit? That’s where miners, validators, and consensus mechanisms come into play.
Blockchain Validation
Each time a transaction occurs, the entire network learns about it. Miners will look into the transaction made, validate that they are legitimate, and put them back into a block. However, not all miners are building the same block of transactions at the same time. How’s that possible? Well, simply, due to latency issues, miners cannot keep track of all transactions occurring. That means that each miner is building his own block that could be different from another miner’s. So, does that mean millions of blocks are getting into the blockchain at the same time? Of course not. That will just cause mayhem in the blockchain. I’ll explain why.
Process of Validation
Let’s say that there are two miners on the blockchain network, we’ll call them Witcher A and Witcher B. They are paying attention to new transactions and building their own block of valid transactions.
Witcher A has validated transactions 1, 2, and 3.
Witcher B has validated transactions 4, 2, and 5.
Both blocks consist of valid transactions. However, if both blocks get added to the blockchain, transaction 2 will be duplicated since both Witchers have included it in their blocks. That will cause a major disruption in the ledger. Imagine you buy an NFT and you pay for it TWICE! So, what happens in that case? Well, only one block gets into the blockchain. Who picks which block? There’s where consensus mechanisms come into the picture of blockchain validations.
Consensus Mechanisms
Consensus mechanisms define the ordering of blocks on the blockchain. The consensus makes agreeing on the sequence of verified transactions much easier. So, what are these mechanisms? Well, there are several types of consensus protocols that blockchain miners follow, most notably the Proof-of-work consensus and Proof-of-stake consensus.
Proof-of-Work
Validators using the PoW consensus compete against each other to solve a complex computational puzzle. The first validator or miner to successfully solves it will be rewarded with cryptocurrency and get the block validated into the blockchain. That means, in the example before, if Witcher A beats Witcher B in solving the puzzle, Witcher A’s block of transactions will add on the blockchain. However, this method requires massive computational power which has a big harming effect on the environment.
Proof-of-Stake
The proof-of-stake protocol came as a solution to the energy consumption problem. Validators are picked depending on the cryptocurrency they are staking. So if both Witcher A and Witcher B staked some of their tokens, the decision of which Witcher gets to add his block will be random. After the Merge, Ethereum shifted from a PoW consensus to a PoS.
How to Become a Validator
For the sake of this article, we’ll discuss how you can become a validator on the Ethereum Blockchain. To become a validator, you can simply use any powerful modern PC system that holds a powerful GPU. Then, since Ethereum updated its consensus to proof-of-stake, you will have to stake at least 32 ETH on the network in order to have a chance of being a validator.
Blockchain Validation Security
We have to differentiate between blockchain validation and consensus mechanisms. Blockchain validation is when a transaction is verified and grouped into a block of validated transactions. Before this block of transactions gets on the blockchain ledger, a consensus has to be reached in order to come to an agreement on the ordering of blocks. Using both consensuses is a tedious process. PoW consensus requires a large amount of computational power while PoS requires the staking of a large amount of cryptocurrency. However, that just adds to the security of blockchain transactions, knowing that not just anyone is validating the blocks of transactions.