Who validates blockchain transactions? Guide 2025

You keep hearing that you don’t need a bank, but who validates transactions on the blockchain if it’s not a company or an intermediary? I mean how can we be sure that bitcoin transactions are secure? In the next article I will explain who validates transactions on blockchain and why it is a revolutionary technology.

1.Who validates transactions on the blockchain

Blockchain is a decentralized technology that functions as a distributed digital ledger. Unlike traditional banking systems where a central entity (bank) verifies and approves transactions, blockchain uses a consensus mechanism for validation. If you want to buy or sell Bitcoin, Ethereum or other cryptocurrencies, then the best place is the Abarai platform. You can call, and a specialist will help you trade.

The steps a transaction goes through until it is validated on the blockchain :

1. Initiating the transaction – When someone sends bitcoin or another cryptocurrency, the transaction is transmitted to the network.
2. Verifying the transaction – The network analyzes whether the transaction is valid by verifying the sender’s digital signature and balance.
3. Adding to a block – The transaction is included in a new data block, along with other recent transactions.
4. Confirmation and Validation – Depending on the consensus mechanism used (Proof of Work or Proof of Stake), the transaction is verified by miners or validators.
5. Adding to the blockchain – Once confirmed, the new block is added to the blockchain and the transaction becomes permanent and irreversible.

This process ensures that no entity can tamper with transactions and all transfers are transparent and secure. Below is an explainer video explaining exactly how a bitcoin transaction is confirmed.

2. Miners and validators – who are they and what role do they play?

Depending on the type of blockchain and consensus mechanism used, transaction validation is performed by two main categories of participants:

a) Miners (Proof of Work – PoW)

Miners are those who secure Proof of Work based networks (e.g. Bitcoin). They use the computational power of their machines to solve complex mathematical problems. The first miner to find the correct solution adds the block to the blockchain and is rewarded with cryptocurrencies. This system provides security and decentralizes the network, but consumes large amounts of energy.

b) Proof of Stake (PoS) validators

In networks that use Proof of Stake (e.g. Ethereum, Cardano, Solana), validating transactions no longer requires high computational power. Instead, participants (“validators”) have to block a certain amount of cryptocurrency as collateral (“stake”). The higher a validator’s stake and the better its track record, the higher its chances of confirming a new block.

This mechanism reduces energy consumption and enables faster validation of transactions, which makes PoS blockchains more environmentally efficient.

Both miners and validators play an essential role in securing and running the blockchain network. Without them, transactions could not be properly confirmed and recorded.

3. Proof of Work vs. Proof of Stake – How are transactions validated?

In the blockchain universe, there are two major mechanisms for validating transactions: Proof of Work (PoW) and Proof of Stake (PoS). These methods determine who has the right to add new blocks to the blockchain and secure the network. Let’s take a look at how each works and their pros and cons.

Proof of Work (PoW) – Security based on computing power

Proof of Work is the mechanism used by Bitcoin and other early blockchains. It involves miners around the world competing to solve complex math problems using the processing power of their computers. The first miner to solve the problem adds a new block to the blockchain and receives a reward in the form of cryptocurrency.

How does Proof of Work work?

1. A transaction is transmitted over the network.
2. Miners take the transactions and try to solve a crypto puzzle.
3. The first to find the solution sends it to the rest of the network.
4. If most nodes accept the solution, the block is added to the blockchain.
5. The winning miner receives a reward in cryptocurrency (e.g. Bitcoin).

✅ Proof of Work advantages

Highly Secure – PoW networks are extremely secure due to the high computing power required to compromise the system. Decentralized – Anyone can become a miner and participate in securing the network. Resistant to attacks – A 51% attack requires enormous resources, making large networks (e.g. Bitcoin) almost impossible to compromise.

❌ Disadvantages Proof of Work

High energy consumption – Mining requires a lot of electricity, raising environmental concerns. Longer transaction time – Confirming a transaction can take several minutes. Requires expensive equipment – Miners need to invest in powerful hardware to compete.

Examples of cryptocurrencies that use PoW: Bitcoin (BTC), Litecoin (LTC), Dogecoin (DOGE).

Proof of Stake (PoS) – Validation based on coin ownership

Proof of Stake was created as a more energy-efficient alternative to PoW. Instead of solving complex mathematical problems, validators (the equivalent of miners in PoS) are selected to verify transactions based on the number of coins they hold and staking them.

How does Proof of Stake work?

1. Users “block” a certain amount of cryptocurrencies in a wallet (staking).
2. The network selects a validator from among those who have cryptocurrencies in the staking, based on the amount of coins and the time they have held them.
3. The validator verifies and adds the transactions in a new block.
4. If the transactions are confirmed by the rest of the network, the validator receives a reward.

✅ Proof of Stake advantages

Low power consumption – Requires no specialized hardware and does not consume excess electricity. Faster transactions – Blocks are validated faster than in PoW. Greater Accessibility – Anyone can participate in validation without investing in expensive equipment.

❌ Disadvantages Proof of Stake

May favor the “richest ” – Validators with more coins are more likely to be selected for validation. Centralization risks – If a small number of participants hold the majority of coins, they may control validation. Lower security than PoW – Although more efficient, PoS is not as time-tested as PoW.

Examples of cryptocurrencies using PoS: Ethereum (ETH), Cardano (ADA), Solana (SOL), Polkadot (DOT).

🔎 PoW vs. PoS – Which is better?

Both Proof of Work and Proof of Stake are effective methods of validating transactions on blockchain. PoW is more secure, but consumes a lot of resources, while PoS is more energy efficient and allows faster transactions.

4. What is decentralization and why is it important?

One of the most important concepts of blockchain is decentralization. Unlike traditional systems where transactions are verified by centralized banks or institutions, blockchain works in a distributed network of computers without a single point of control.

Why is decentralization so important?

✅ No central authorities – There is no single administrator with the power to block or modify transactions. Anyone can check and participate in the network.

✅ Less censorship – Because it doesn’t depend on a centralized entity, no one can stop transactions as long as they follow the rules of the blockchain protocol.

✅ Security and trust – Each transaction is validated by multiple participants and stored in an immutable ledger, which reduces the risk of fraud.

✅ Resilience to attacks – Unlike a centralized banking system, where a cyberattack can compromise the entire system, blockchain is much harder to attack because data is distributed across the entire network.

For example, if a bank suffers a cyber attack, all customer funds could be affected. On blockchain, in order to compromise a transaction, an attacker would need to control more than 50% of the total power of the network – a scenario almost impossible in large networks like Bitcoin.

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5. How can transactions be compromised? Risks and solutions

Although blockchain is considered a secure system, there are a few risks that users should be aware of:

a) 51% attack

This type of attack occurs when a single group or entity manages to control more than 50% of the computing power of a Proof of Work (PoW) based blockchain network. If such an attack were to succeed, the attacker could double the spending, rejecting legitimate transactions and allowing fraud to be perpetrated.

Solution: large blockchains, such as Bitcoin and Ethereum, have enormous computing power, making an attack of this type extremely costly and nearly impossible.

b) Smart contract errors

In blockchains that enable smart contracts (e.g. Ethereum, Solana, Cardano), programming errors can lead to financial losses. Hackers can exploit these vulnerabilities and steal funds from poorly secured contracts.

Solution: Security audits for smart contracts and the use of verified platforms reduce risks.

c) Phishing attacks and theft of private keys

Many users lose funds due to phishing attacks or private key theft. Attackers send fraudulent emails or messages that appear to be from legitimate services to persuade users to reveal their login details.

Solution: Never enter your passphrase or private key on unknown sites and use two-factor authentication (2FA) for your accounts.

d) Exploiting network vulnerabilities

Smaller or newer blockchains may have security issues or a low number of validators, making them vulnerable to attacks.

Solution: use established blockchains for major transactions and be cautious with new crypto projects.

6. Key takeaways

✔ The best place in Romania where you can trade cryptocurrencies is the Abarai platform.

✔ Blockchain doesn’t need banks or intermediaries, as transaction validation is done by users on the network.

✔ There are two main validation mechanisms: Proof of Work (PoW) and Proof of Stake (PoS), each with advantages and disadvantages.

✔ Miners and validators are responsible for securing the network, verifying transactions and adding new blocks to the chain.

✔ 51% attacks are almost impossible in large networks like Bitcoin, as they require majority control of computing power or stored cryptocurrencies.

✔ Proof of Work (PoW) requires a lot of energy and computing power and is used by Bitcoin, while Proof of Stake (PoS) is more energy efficient and is used by Ethereum and other modern blockchains.

✔ Decentralized validation makes blockchain a secure technology, eliminating the risk of fraud and censorship.