Blockchain consensus refers to the process by which the participants in a blockchain network agree on the state of the blockchain ledger. In a decentralized blockchain network, there is no central authority that can make decisions about the state of the ledger, so the consensus mechanism is used to ensure that all participants have a consistent view of the ledger.
One of the most popular consensus mechanisms used in blockchain networks is called “proof of work.” In a proof of work system, participants, also known as “miners,” compete to solve complex mathematical puzzles in order to add new transactions to the blockchain. The first miner to solve the puzzle gets to add the next block of transactions to the blockchain, and in return they receive a reward (in the form of cryptocurrency). The computational work required to solve the puzzle ensures that it is difficult for any one miner or group of miners to take control of the blockchain and manipulate it.
The concept of “invisible hand” as described by Adam Smith in his book ‘The Wealth of Nations’ refers to the idea that markets tend to regulate themselves through the self-interest of individuals and firms, and that the market’s ability to do so is beneficial for society as a whole. The “invisible hand” is not a physical entity, but rather a metaphor for the market’s ability to coordinate the actions of millions of people and organizations in order to allocate resources efficiently.
Similarly, in a blockchain network, there is no central authority that coordinates the actions of participants, but rather a consensus mechanism that allows the network to come to a consensus on the state of the ledger. The consensus mechanism in a blockchain network acts as an “invisible hand” that coordinates the actions of the participants and ensures that the network is secure and that transactions are processed efficiently.
The open and transparent nature of the technology allows for trustless interactions between parties, where there is no need for an intermediary or third party to ensure the integrity of the transactions, this enables the parties to interact and make agreements with ease, this feature is similar to the concept of the “invisible hand” guiding self-interest towards the collective benefits.