Crypto Academy Season 3 Beginners' course - Task 4: Different types of Consensus Mechanisms|| Posted by @preshdan || 100% Power-Up
What is difference between PoW & PoS? Advantages & Disadvantages? Which one is better in scaling Capacity? Examples?
I am so well pleased my amiable professor and fellow honourable steemians to be a part of this beginners Task-4 which focuses on Different types of Consensus Mechanisms.
A brief overview of the PoW and PoS.
PoW stand Proof of Work Consensus Algorithm or Mechanism which is a protocol that demands some high level of energy in checking, validating and solving of mathematical conundrums which ensures the completion of transactions and also ensures they are added to the blockchain. On the contrary, the PoS (Proof of Stake), on the other side is a concept that guarantees that having a reasonable amount of staking power (Coins) locked up in their ownership is a requisite of minners before they are permitted to check or prove the validity of transaction in the ecosystem. This implies that the staking power a minner has is directly proportional to their mining power.
Bitcoin is perceived as the flag bearer in the cryptocurrency world, in the same manner, Profe-of-Work (PoW) is perceived the same way in consensus algorithm. Profe-of-Stake (PoS) was invented as an alternative to PoW with the aim of improving on the observed concerns in the it's operations.
As a result of the methodical and orderly nature of the PoS, there is increased possibility of hoarding tokens which without being used will consequently create unnatural scarcity in the ecosystem. On the contrary, such line of fast-paced activity is never observed the PoW.
In the process of validation for PoW, high level of energy is essential which makes the sustainanse of Pow operation very expensive while on the contrary, miners in PoS only need a considerable high amount of coin/stake for the sustainanse of its pertinence in the process of mining. Thus, PoS requires and consequently makes good, thorough, or careful use of energy; not consuming extra.
The validation of transaction in the PoW mechanism, is accessible the who first solved the difficult mathematical conundrum while in the concept of PoS, nodes who are connected to the server are in a random manner assigned the checking and proving the validity of transaction and those who possesses greater coin are observed to also possess higher mining power as well advantage.
Another fundamental variation between the two is their selection mode. PoW minners are selected in a random manner making it a more decentralized protocol dissimilar to PoS in which the selection of minners is fundamentally carried out with regards to the number of stakes or coin locked up in the number's ownership. This specifically shows that miners in the PoS requires a higher stake in order to have a higher mining power to be able regularly validate transactions.
PoS has an accurately organized compensation conditionality targeted at effectively fighting vanishingly small network which is dissimilar to what is observed in the PoW in which compensation is not like that of PoS.
Competition exist between minners in the PoW on who will be the first to solves the difficult mathematical conundrum while on the contrary, nodes in PoS are selected in a random manner to check and prove the validity of transactions.
"Minners" is the concentration of the PoW, whereas for the PoS, it is "Validators".
The PoW deals with mining of blocks, while in the PoS, blocks are actually minted or formed with concerted effort.
PoW allows for equity in the checking or proving the validity of transaction as miners contend emulously in order to solve complex mathematical conundrum where the first gets rewarded.
It is a more decentralized system such that it permits even and uniform dispensing of rewards to every parties.
The PoW is a more protected consensus algorithm free from the danger of theft and has proven records of high sefty structures.
When compared to other consensus algorithms, PoW is observed to have a low scalability capacity.
It is cost intensive as regards putting up the rigs for mining as well as machineries required to keep mining activities in the system moving.
PoW consumes significantly high electricity energy in order to complete or prove the validity of transaction in the system.
PoS doesn't require great skill or knowledge in order to partake or get involved in staking activities.
Unlike PoW, PoS consumes significantly less electricity energy. This implies that PoS requires less electricity energy while proving the validity of transactions.
Less cost and resource expensive seen in procuring machineries.
PoS is less risky as regards the process of checking or proving the validity of transaction being attacked by miners. This as a result of the well constructed and organized incentives put in place for them.
As a result of the effort in pursuit of always increasing mining capacity, miners in turn increases the value or worth of their wallet by the increase in coin value. This entirely results to more profitability.
The selection of validators is based on the quantity or volume of coin/stake in their ownership which makes the reward a bit biased.
As soon as stakes has been staked or locked up, it is no longer accessible by miners, untill the staking period is over, it will be made readily obtainable.
PoS security structural design is yet to be tested and proved unlike that of the PoW.
PoS algorithm spurs coin hoarding with little intention to make a sell. This may may have a link to the way of operation which requires that validators are expected to have a significant amount of coin/stake in order to have a higher mining capability.
There are cases of transaction fee reduction as well as reduction of accrued reward for validators or minner for smaller Altcoins which consequently raises the strength of feasible 51% attack on the system.
As the case may be, the PoS has been observed to have better scaling capability with regard to the PoW. It is worthy of note that the PoS happens to be an alternative to the PoW which simply implies that it is aimed at correcting most of disadvantages seen in the PoW of which scalability is one of such issues as it inconvenience speed and consumption of energy. All these sums up to raise the rate of production observed in the PoS protocol; compared to PoW, PoS has a higher Transaction Per Seconds (TPS).
The PoS outpaces PoW as it taks advantage of its low energy requirement as well as faster transaction times which are the major scalability issues found PoW protocol. Furthermore, PoS makes use of solution implements such as the Byzantine Fault Tolerance which ensures speed and reliability or uniformity in its process of validation.
Ethereum and Bitcoin are passionate users PoW consensus algorithm, with Ethereum having heralded intentions to change to the PoS in order to enable it improve its scalability.
Shadowcoin, Blackcoin, Peercoin, are examples on the PoS protocol
Bitcoin and Ethereum are examples on the PoW protocol
There is a possibility and an expection that Bitcoin may probably make a change to PoS as Ethereum has heralded having observed a stronger consensus algorithm, evincing strength which would help it enhance its scalability otherwise be at the likelihood of a negative outcome in the future if proceed with the use of the PoW. This is however important owing to the fact that it may have a lesser number of minners checking or proving the validity of transactions with lower reward clandestine payment and transaction fee and consequently may lead to 51% attack on the blockchain system. PoS emanated as an alternative to PoW as well as a solution to the demerits and deficiencies of PoW and therefore is necessary to be a Validator rather than stay as a miner.
A very big thanks to you my amiable Professor @sapwood for the shared ken and perception and for the meaningful impact.
Done by: @preshdan
Cc:.
Hello @preshdan, I’m glad you participated in the 4th Task of the Beginner’s class at the Steemit Crypto Academy. Your grades in this task are as follows:
Observations:
That's true. PoW consumes high amount of energy and this makes the operation cost very expensive.
Recommendation / Feedback:
Thank you for submitting your homework task 4. We hope to see the rest of your submissions.
Thanks for that kind review and for the gift of Grammarly