Various novel approaches are taken to assure consensus on the state of a blockchain amongst its participants. In general, the individuals who contribute to the validation of transactions on a decentralized blockchain are rewarded with a periodic emission of the network currency.
In a proof-of-work consensus protocol, a user aims their computing power at solving an algorithmic computation in an effort to win the ‘mining reward,’ or periodic coin issuance. The 'miner' of a block, who has solved the most recent instance of the computation, also gains the right to verify a batch of transactions and collect the related transaction fees. With each solution, the algorithm resets and miners race to continue the blockchain where the last successful miner left off. The ‘difficulty’ of these algorithms adjusts periodically based on the change in network hashrate.
Proof-of-Stake consensus algorithms replace the competing computing power of miners with a sort of decentralized lottery, in which ‘stakers’ can increase their chances of winning by pledging more of the network’s native token to the consensus process. Thus, by increasing their ‘stake’ in the network, a user increases their coin rewards for securing its use. Most proof-of-stake protocols are inflationary in nature, but save validators the cost of computing power and energy.