Consensus Mechanism
Quick Answer
A consensus mechanism is the protocol by which a blockchain network agrees on the state of the ledger. Common types include Proof of Work (Bitcoin) and Proof of Stake (Ethereum).
Full Definition
A consensus mechanism is the protocol by which a blockchain network agrees on the current state of the ledger. The two most common are Proof of Work (PoW), which uses computational puzzles (Bitcoin), and Proof of Stake (PoS), which uses staked collateral (Ethereum, Solana, Polygon). Consensus mechanisms determine a blockchain's security, speed, energy consumption, and finality — all of which directly affect payment processing reliability and confirmation times.
Related Terms
Chargeback
A chargeback is a forced payment reversal initiated by a cardholder's bank. Crypto payments are chargeback-free by design because blockchain transactions are irreversible once confirmed.
Cold Wallet
A cold wallet is cryptocurrency storage not connected to the internet, providing maximum security against hacking. Examples include hardware wallets like Ledger and Trezor.
Confirmation Time
Confirmation time is the duration between a transaction being broadcast and receiving its first block confirmation. It ranges from under 1 second (Solana) to 10 minutes (Bitcoin).
Cross-Chain
Cross-chain refers to interoperability between blockchain networks, enabling asset transfers across them. Essential for multi-chain payment gateways that accept payments from any supported chain.
Crypto Payment Gateway
A crypto payment gateway is software that enables merchants to accept cryptocurrency payments and receive settlement in fiat or stablecoins. It handles wallet connection, exchange-rate conversion, and payout.
Custodial Wallet
A custodial wallet is a cryptocurrency wallet where a third party holds and manages the private keys on behalf of the user, offering convenience but introducing counterparty risk.