Blockchain has been regarded as a promising technology for IoT, since it provides significant solutions for decentralized networks that can address trust and security concerns, high maintenance cost problems, and so on. The decentralization provided by blockchain can be largely attributed to the use of a consensus mechanism, which enables peer-to-peer trading in a distributed manner without the involvement of any third party. This article starts by introducing the basic concept of blockchain and illustrating why a consensus mechanism plays an indispensable role in a blockchain enabled IoT system. Then we discuss the main ideas of two famous consensus mechanisms, PoW and PoS, and list their limitations in IoT. Next, two mainstream DAG based consensus mechanisms, the Tangle and Hashgraph, are reviewed to show why DAG consensus is more suitable for IoT system than PoW and PoS. Potential issues and challenges of DAG based consensus mechanisms to be addressed in the future are discussed in the last section.