(1) What is the difference between PoW & PoS? Advantages & Disadvantages? Which one is better in scaling Capacity? Examples?

OR

(2) What is the difference between PoS & DPoS? Advantages & Disadvantages? Name a few Blockchain projects which use the DPoS consensus mechanism and indicate the scaling capacity?

OR

(3) Name a few Blockchain projects which use dBFT in combination with other consensus mechanisms? Indicate the scaling capacity? Explain dBFT along with the pros and cons?

I would like to choose question number 1 to answer for the homework Task 4.

Cryptocurrencies use many consensus mechanisms to ensure their information is true and honest. To promote cyber security, safety and trust, blockchain uses consensus mechanisms.

Here the difference is, the way the consensus is reached. There are many consensus mechanisms, but here my intension is to talk about two of them,

• Pow – Proof of Work
• PoS - Proof of Stake

Who is responsible to add new block into blockchain?

Normally a new block is added into blockchain after verifying its transaction coz if it is a malicious node, it can manipulate the data of the blockchain.

There are many nodes who are competing to add that new block into blockchain. Each of these nodes have to do some computing work and it is called as “mining” and it is done by using powerful computers. Each node/miners have to solve a complicated cryptographic math problem and those who solve it first, can add that new block into blockchain. Once the problem is solved the transaction is confirmed and initiated. The complexicity of that problem depends on the size of network, Number of active users and the size of blockchain. The first miner who could able to solve cryptographic puzzle gets the miner reward from the mining pool.

As PoW occupies huge energy consumption, found alternative; a new consensus algorithm, PoS which is more effective compared to PoW.

In PoW each and every miners are mining to validate the initiated transaction in a blockchain. But this is something that time wasting and wasting human labor.

So PoS gave a solution to it by choosing one node to validate the next block. Here PoS has validators instead of miners and validators are minting or forging the new block unlike miners are mining in PoW. Selection of a validator does not happen randomly. To become a validator, a node has to deposit some amount of coins to the network as a stake. This amount of stake determines the chance of a validator to be selected to mint the new block. This may seems unfair, but in reality it is more fair compared to PoW.

When a new block comes to the blockchain, a validator with high stake, forging it and after completing its validation that node signs off from the block. Thereafter that new block is added to the blockchain. Here the node gets fees as a reward for working with that process.

As a summary, I will brief all these as below.

^{This table is drafted by me with help of Microsoft Power Point}

Advantages of PoW

1. Anyone can be a partner in Proof of Work by involving its mining process.
2. As it is decentralized, has high safety and security.
3. Powerful mining farm owners can gain more benefits.
4. Many cryptocurrencies are now using PoW.
   Eg: Bitcoin, Bitcoin cash, Litecoin

Disadvantages of PoW

1. As miners are joining day by day, system becomes more complex. Thereby, consumption of energy increases day by day.
2. More cost for the mining machines and electricity.
3. Need to have high performance computers for mining, so huge human labor need to be maintained.
4. As the number of people are increasing day by day for the contribution of this process, there is a gradual fall off of privileges from this.
5. Due to many machines are worked in this, more chance to turn into inoperable and many more electronic waste (E- waste) is releasing to the environment. Thus, accumulating those, environmental pollution increase day by day.

Advantages of PoS

1. Compared to PoW, no more need for hardware and software equipment.
2. Able to obtain more rewards by increasing staked amount of tokens.
3. Required less power consumption compared to PoW.
4. Able to receive a fixed profit proportional to the investment we do.

Disadvantage of PoS

1. To devote with PoS, need to make higher investment.
2. If someone achieve 51% of the cryptocurrency, that person will occupy the access to the network.
3. Validators receive network fee, but not a block reward.

PoS is created as an alternative to PoW (Proof of Work) and compared to PoW, PoS is more scalable and better in scaling capacity.

In PoS mechanism, it gains short time period to validate the transactions unlike Pow take more time to validate, sometimes hours to accomplish it.

In here most significantly, deficiencies arises from PoW have been solved and massive environmental pollution caused due to high power consumption has been avoided.

ETHEREUM 2.0

One of most popular crypto used in the market and launched its latest version Ethereum 2.0 .

In here, they grant users who joined with the blockchain as validators. Every user/validator can stake some amount of Ethereum to join with this new system. Most important thing is, here we can attain more benefits rather than pc mining.

CARDANO

Cardano is a third generation blockchain system. This has introduced PoS mechanism. With the help of Proof of Stake, Cardano has cleared up issues related with its second generation blockchain.

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This is the end of my homework task 04 and finally I would like to give my gratitude to @sapwood for giving us this valuable lecture. Frankly, I was able to gather perfect knowledge on this regard.

GOOD LUCK AND HAVE A NICE DAY!!

• My achievement 01 post: here.
• My achievement 02 post: here.
• My achievement 03 post: here.
• My achievement 04 post: here.

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