What are Validators in Crypto Transactions and Ecosystems?
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What are Validators in Crypto Transactions and Ecosystems?

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What are Validators in Crypto Transactions and Ecosystems?

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Along with technological advances and developments to date, crypto and blockchain have become the leading technologies that provide many benefits for humans.

Cryptography is a technique for securing information using codes and encryption. In the context of fintech, crypto refers to cryptocurrencies as well as crypto assets, including Bitcoin, Ethereum, and others.

Meanwhile, blockchain is the underlying technology underlying cryptocurrencies and has broad potential beyond the financial domain. Blockchain itself is a decentralized digital ledger that records transactions in linked and cryptographically encrypted blocks.

In maintaining the security and integrity of the blockchain network, consensus mechanisms are the rules that govern how the blockchain network reaches agreement on the legal and accurate status of transactions.

This consensus is necessary because the blockchain is a decentralized network, meaning that there is no central party to authorize transactions. In a decentralized network, a consensus mechanism ensures that all participants agree on the order and validity of transactions.

It should also be noted that blockchain can basically work because it has a validator role. The reason is that the validator will allow transactions to be verified, and the transaction process can be carried out with an open process. So, to understand what a validator is in crypto and its types, see the full review below.

What is a validator in crypto?

What is a validator in crypto?

Basically, a validator in crypto is an entity or node on a crypto network whose job it is to verify and authorize transactions that occur there. In a decentralized blockchain network, validators play an important role in maintaining the integrity and security of the network and ensuring that the transactions included in the block are valid and consistent.

The transaction verification and validation process by the validator can be seen in the following steps, including:

  1. Acceptance of Transactions

New transactions are submitted to the network in the form of cryptocurrency transfers, smart contracts, or other types of transactions, depending on the type of network.

  1. Format and Signature Check

First of all, the validator will check whether the transaction has the correct format and a valid digital signature. This digital signature is used to secure transactions and ensure that they come from the rightful owner.

  1. Balance and Validity Check

Next, the validator will check whether the sender of the transaction has sufficient balance to make the transaction. If the balance is sufficient and the transaction looks valid, then the process continues.

  1. Verify output availability

In the next stage, the validator checks previous transactions to ensure that the output used in the current transaction has not been used in other transactions to prevent double spending.

  1. Addition to the Transaction Queue

Transactions that pass verification will be added to the queue of transactions waiting to be included in the next block.

  1. Consensus Process

Based on the consensus mechanism used by the network (such as proof-of-work, proof-of-stake, or others), validators will compete for the right to create new blocks and add transactions to existing blocks.

  1. Making Blocks and Adding Transactions

Next, the validator that won the consensus process selects a transaction from the transaction queue and includes it in a new block. Each transaction in the block is also associated with a validator’s signature.

  1. Block Deployment

New blocks containing transactions that are validated and verified by validators are propagated throughout the network.

  1. Confirmation by Other Nodes

Other nodes on the network will verify the new block and the transactions within it using the validator’s signature. If all are valid, then the block is considered valid and accepted by the entire network.

  1. Update account status and balance.

Finally, once the block is deemed valid, the crypto owner’s account status and balance will be updated according to the transactions in that block.

Types of Crypto Validators

Types of Crypto Validators

After knowing what a validator is in crypto, it is important to understand the types of crypto validators. This is especially important for those of you who are interested in or involved in the world of crypto and blockchain.

Basically, by understanding these types of crypto validators, you will be able to make better decisions, participate more effectively in the crypto ecosystem, and carry out tasks related to validation or investment with more confidence. The following are the types of crypto validators that you need to know:

  1. Proof-of-Work (PoW) Validators

Within the Proof-of-Work (PoW) mechanism, validators, known as miners,” compete to solve complex mathematical puzzles. The process involves solving tasks that require high computing power. How the PoW validator works can be described as follows:

  • Receive Transactions

First, the PoW validator will accept new transactions submitted to the network. The transaction can be a cryptocurrency transfer transaction, a smart contract, or any other action on the network.

  • Block Making

Then, a group of transactions is grouped into blocks to be mined. Each block has a cryptographic signature that connects it to the previous block and forms a block chain.

  • Puzzle Solving

Miners start solving complex math puzzles related to the blocks to be mined. The puzzles are designed to require significant computational effort and are time-consuming.

  • Proof of Solution

When bitcoin miners complete a puzzle, they generate a “proof of solution” that validates their work. The process requires trial and error until the correct solution is found.

  • Proof of Work

Miners will send proof of this solution to the network to verify it. The network can quickly check if the solution is correct by calculating a certain value based on the puzzle.

  • Block Confession

If the solution is accepted, the successful miner will gain the right to create a new block. That block contains the transactions they have selected from the transaction queue.

  • Block Deployment

New blocks containing validated transactions are propagated throughout the network. Other nodes verify the legitimacy of blocks and transactions within them.

  • Prizes and incentives

Lastly, miners who successfully add blocks to the chain will be rewarded in the form of cryptocurrency. This includes block rewards and transaction fees from transactions within the block.

  1. Proof-of-Stake (PoS) validators

In the Proof-of-Stake (PoS) mechanism, validators, or stakers,” do not need to do computationally intensive work as in PoW. Instead, the right to mine or create blocks is determined based on the ownership of the cryptocurrency. Here’s how the PoS validator works that you need to know, namely

  • Crypto Ownership

First of all, the staker must have a certain amount of cryptocurrency held as collateral, or “stake”.

  • Selection of validators

Based on a number of factors, such as the amount staked and the length of time the currency is held, validators are selected to create blocks or verify transactions.

  • Block Making

The selected validator will have the right to create blocks based on their staking amount. They select the transactions to include in the block.

  • Block Addition

A new block containing the selected transactions is compiled by the validator and added to the chain.

  • Validation by Other Nodes

That block is verified by another node in the network that also performs PoS validation. Validation is based on the staking amount and the validator’s reputation.

  • Rewards and incentives

Validators who successfully add blocks to the chain are rewarded with transaction fees from that block and other incentives according to the network protocol.


In conclusion, validators play an important role in maintaining the integrity, security, and consistency of the blockchain network within the crypto ecosystem. The validator’s important role ranges from verifying transactions, securing the network, creating new blocks, executing consensus, receiving rewards, maintaining blockchain integrity, and participating in protocol updates.

In addition, it is also important to understand the Proof-of-Stake (PoS) consensus mechanism. This is because understanding the PoS mechanism will open a deeper view of how the crypto network works as a whole and appreciate the important role that validators play in maintaining the sustainability and success of the network.

As a reminder, there are two types of validators that are commonly known, namely validators for proof of work (PoW) systems such as Bitcoin, which are known as miners, and validators for proof of stake (PoS) systems such as Ethereum, which validate by staking or are called stakers.

So, for those of you who are interested in staking crypto assets, INDODAX currently has a new feature called crypto staking (EARN). With this feature, you will get a reward after locking your crypto assets via the Indodax application. The reward for staking crypto is similar to the interest on deposits in savings.

So, let’s start staking crypto right now on Indodax!

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