Different types of Consensus Mechanisms - Steemit Crypto Academy Season 5 - Homework Post for Task 6.
What is the difference between PoW & PoS? Advantages & Disadvantages? Which one is better in scaling Capacity? Examples?
Blockchains are a decentralized system that is newly introduced to remove all third parties from your finances and make you totally in charge of your funds. Blockchain achieves these, through what is knowns as the consensus mechanism. The consensus Mechanism of blockchains ensures that all nodes that are on the network are properly synchronized and they also ensure the legitimacy of all transactions. The consensus mechanism makes sure that the blockchain network which is made up of different nodes is all connected to the same network and this is where the authentic verification of the transactions are been done. They are many types of consensus mechanisms that are available.
Types od Blockchain Consensus Mechanism includes
- Proof of Work (POW)
- Proof of Stake (POS)
- Delegated Proof of Stake
- Proof of Capacity
- Proof of Elapsed Time
- Proof of Identity
- Proof of Authority
- Proof of Activity
But for this assignment purpose, we will be looking at the difference between the Proof of Work and the Proof of Stake. These are the two major consensus mechanism that most cryptocurrency uses currently.
- Proof of work uses mathematical equations which most of the time are very difficult to solve and only powerful supercomputers can be used to solve them while in Proof of Stake, the blockchains consensus mechanism is done in a way that there is a network of validators that contribute their assets and they get the opportunity to validate the new transaction, get the blockchain updated and also get rewarded. The validator with more assets usually wins.
- Proof of work was the first consensus mechanism that was established, and it was used by Ethereum, bitcoin litecoin, dogecoin, and some other cryptocurrency while the proof of stake was developed because of some setbacks of the POS, such as being scalable and some cryptocurrency that made use of the POS includes the EThereum 2.0, Cardano Tezos and many others.
- Proof of work consumed very high Energy, that it was said that the cost of electricity to mine a coin was like $150,000 daily but in Proof of Stake, does not consume high electricity, you can even do it from the comfort of your home.
- The block is mined by miners, the winner is determined by how much of computational work is being done by the miner while in the case of the Proof of Stake, the blocks are being validated by the validators, this is achieved by validating new block by the amount of stake a validator holds.
- In proof of work, the first miner usually gets the reward after solving the cryptographic puzzle that each block contains while the Proof of Stake, no reward is given to the validator, but they are given network fee as their reward
- In proof of work, the need for one to have a specialized system, is used to optimize the processing power while in proof of stake, a standard server-grade unit is adequate for it power.
- One of the greatest advantage of the POW is its true Decentralized method, which was why it was created
- Proof of Work has a very high level of security and checks all dubious acts and also double receiving
- All you need for you to earn is to the miner and your ability to solve the cryptography as quick as possible
- It is dependent on the use of the brain ability
- Proof of work consumes really high energy that can coat you a huge of money also
- Miner spends much on the electricity cost also
- It is very slow with the execution of transaction
- You will need very power high computer that are equipped with advanced hardware
- It scalability is very low also.
- Much energy is not needed in other for you to mine the block
- Also much hardware requirement is not that needed
- One of the sole aims of Blockchain creation is the formation of a Decentralized system, and the proof of stake system achieved that.
- Proof of Stake was solely introduced to solve the scalability issue faced by the proof of work. This is achieved by increasing the scale
- Proof of scale also has very high security when compared to the proof of work
- For you to win using the Proof of Stake, you will need to hold a lot of funds, simply proof of stake is not meant for the poor
- It has very low security when compared to the proof of work
- The validators with much funds can have too much influence on the verification of a transaction.
- Some coins that use proof of stake mostly require locking up stake coins for a small amount of time.
Proof of Stake is very scalable when compared to the proof of work, it is very fast, consumes lower energy, and is very efficient. Proof of stake came to solve the scalability issue of the proof of work. It achieved that by reaching more people in a second
The coin that uses Proof of Stake includes
- Solana
- Cardano
- Algorand
- Tezos
- Celo
- Mina
- BitShares
The coin that uses Proof of work includes
- Bitcoin
- Ethereum
- Dogecoin
- Litecoin
- Bitcoin
- Bitcoin Cash
- Kadena
In conclusion, the PoW and the PoS are both good depending on your choice of usage and they are used until this very moment but a lot of improvement has been done on both consensus mechanisms and makes them good to use. The issue of power is still present with the PoW and the issue of the Highest staker is also still present with the PoS.
Cc:@sapwood