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PROOF OF WORK AND PROOF OF STAKE - THE DIFFERENCES

INTRODUCTION:

Proof of Work and Proof of Stake are both known as 'consensus mechanisms' and they are the present necessity to substantiate transactions that occur on a blockchain without the requirement of a third party. Proof of stake was built as a substitute to proof of work or PoW, the primary consensus algorithm in the complex blockchain technology.


  • UNDERSTANDING PROOF OF WORK (POW):

Markus Jakobsson and Ari Juels in a document published in 1999, first coined the term 'Proof of Work', which is related to Bitcoin. Proof of Work is a protocol created to form digital transactions safely without the need for a third party. PoW is built on solutions to previous puzzles and it is a way of validating present and past transactions. 


  • The work that decodes the puzzle, procedure rewards for the person who could solve it, and the procedure is called mining.
  • Framing it in other words is mostly an algorithm that's built to validate the transactions and obtain new blocks that are further added to the blockchain. Crypto trading is a challenging task for many people, apps such as Bitcoin Revolution app can be helpful for beginners.
  • With PoW the miners are battling to complete the cryptographic numerical first so that they can earn a new Bitcoin as a reward.
  • The puzzles are very complicated and extremely difficult to solve. Therefore PoW reduces the threat of attack by hackers by 51%.
  • No miner can ever control the Bitcoin network alone based on the HahCash PoW system.
  • All the miners must give proof of the work that they have done before claiming a new block.
  • Proof of Work also limits the number of blocks that can be generated like for example, only one Bitcoin block (BTC) can be created every ten minutes.
  • UNDERSTANDING PROOF OF STAKE:

Proof of Stake or PoS is a concord algorithm that determines who verifies the next block, as per how many coins one holds, in place of miners solving cryptographic puzzles using computers to validate all transactions like they do in conventional PoW.

  • The chances of verifying a new block are decided by how large a post of a person is.
  • There is no concept of receiving a block reward; instead, the validator collects network fees as their prize.
  • The first cryptocurrency to implement a positive consensus model was peer coin.

  • PROOF OF STAKE VS PROOF OF WORK:

  • In Proof of Work, the chances of mining a block are based on how much computational problem is solved by a miner whereas, in Proof of Stake, the probability of authenticating a new block is based on how many coins a holder owns.
  • The miner who can solve the cryptographic problem first is rewarded a Bitcoin in Proof of Work while in Proof of Stake, the scenario is a lot different. The validator does not receive a block as a reward instead they collect the network fees as a prize.
  • Miners compete against each other to add each block to the chain by solving complex mathematics using their technical powers. In Proof of Stake, there is nothing as competition as block creator is selected by an algorithm that is dependent on user stake.
  • Hackers would require 51% more computation skills to add a destructive block in PoW however, in PoS, hackers need to possess 51% of digital currency which is impossible technically.
  • The system of PoW is less efficient in energy and less costly but more certified. The system of Proof of Stake costs more than the Proof of Work system but is less proven.


CONCLUSION

The most concerning problem with PoW is that it needs an immense quantity of energy. The PoS system is a notable breakthrough in this case. The Ethereum community is working towards a PoS system to reduce the blockchain's Carbon footprint.