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PoW and PoS are the most popular consensus mechanisms used in the blockchain. This article will explain the consensus mechanism, describe PoS and PoW, and explain their differences.
Proof of work (PoW) and proof of stake (PoS) are the two most widespread consensus mechanisms in the blockchain. A consensus mechanism is a method of reaching an agreement between the participants of a decentralized system. Key cryptocurrencies use POW and POS methods to protect the chain and inspect the transaction.
Proof of work is the oldest and most popular consensus mechanism. Satoshi Nakamoto is credited with the creation of PoW. The PoW mechanism is powered by miners who compete for the right to verify new blocks and update the blockchain. Miners are required to use massive computational powers for the verification of new blocks. This creates disadvantages in terms of energy consumption and scalability. The blockchain rewards miners with coins for the successful validation of a block. The PoW is genuinely decentralized in nature. The major advantages of PoW are fairness and security. Miners have control over the network. Moreover, PoW prevents double expenses because every user does many computations.
Proof of stake is the most popular alternative to PoW. PoS was created a few years after PoW. Most altcoins now use PoS. As a consensus mechanism, PoS aims to mitigate some of the disadvantages of PoW, such as scalability and energy use. Scott Nadal and Sunny King created PoS to develop a more scalable consensus mechanism that would use less electricity.
PoS validators do not need massive computers for verification. By contrast, they just block their cryptocurrency in the blockchain, in a process called staking. Staking is at the core of PoS. The chain rewards participants based on their stake. The reward is taken from the transaction fee in the block they validate. More coins in the stake mean higher chances of receiving the prize as the validator. The validator publishes the next block.
The PoS model is poised to take over the crypto world. The PoS mechanism’s main advantage is less demanding computer calculations. The instrument does not need expensive hardware. Transactions are faster too. The model is also more sustainable because participants have monetary incentives to increase their stake in the chain.
Proof of stake disadvantages are limited experience with significant blockchains and susceptibility to losing control based on capital, risks of double-spending. Participants with more tokens can take over the governance of the chain. Ultimately, PoW has better security than PoS because the cost of attacking the well-established PoW is much higher.
The main difference between POW and POS relates to how they determine who is responsible for inspecting transaction blocks. Participants in PoW are called miners. Participants in PoS are called validators.
|Proof of Work||Proof of Stake|
|The oldest consensus mechanism||Newer consensus mechanism|
|Used in major blockchains||Used in altcoins|
|Participants: Miners||Participants: Validators|
|Block validation: Brute Force||Block validation: Staking|
|Chains: Bitcoin, Ethereum||Chains: Tezos, Cosmos, Ethereum 2.0|
|Advantages: fairness, security, no double spending||Advantages: Energy efficiency, scalability, future-proof, slower transactions|
|Disadvantages: High energy use, poor scalability, slower transactions||Disadvantages: no implementation with major blockchains, double spending, capital-centered governance, security vulnerabilities|