Since there is no central bank, the network must agree (achieve “consensus”) that a transaction is valid. The two primary mechanisms are:
Proof-of-Work (PoW): Used by Bitcoin, this requires “miners” to use significant computing power to solve complex puzzles, validating blocks and earning a reward.
Proof-of-Stake (PoS): Used by Ethereum (since ‘The Merge’), this requires “validators” to stake (lock up) their existing coins to earn the right to validate transactions, which is generally more energy efficie
nt.