As there are no centralized bookkeeping institutions such as banks to ensure the consistency of every transaction in the blockchain network, a consensus mechanism is needed to addresses this issue. Currently, the main consensus mechanisms are Proof of Work and Proof of Stake.
Proof of Work consensus mechanism, or PoW, is the original consensus algorithm in the blockchain network. It is used to measure the work generated and determine the probability of receiving a reward. With PoW, miners compete for the right to complete transactions on the network and get rewarded.
With Proof of Stake consensus mechanism, or PoS, the probability of mining a block depends on the amount of Bitcoin a miner holds and for how long. This is similar to the dividend system used in stocks. The more shares held, the higher the dividends received.
Currently, many cryptocurrencies utilize proof of work to issue new tokens and proof of stake to maintain the security of the network. With the advancement of technology, there may be new consensus mechanisms in the future.