Different types of Consensus Mechanisms - Steemit Crypto Academy Season 4 - Homework Post for Task 6
Hello Steemians,
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Question 1
What is the difference between PoW & PoS? Advantages & Disadvantages? Which one is better in scaling Capacity? Examples?
What is Proof-of-Work
Proof-of-Work is no doubt the most popular type of consensus algorithm because it's the first type of consensus algorithm to be used by a blockchain network.
Proof-of-Work refers to a type of consensus mechanism where individuals/miners contend against their selves to solve a difficult puzzle, and the winner of the competition would get the right to validate new transactions into the block as well as receive rewards for their job.
What is Proof-of-Stake
Proof-of-Stake is the second most popular type of consensus mechanism because it came as a better alternative to the existing Proof-of-Work mechanism, and lots of blockchains started using it because of its speed and low energy consumption rate as compared to PoW.
Proof-of-Stake refers to a type of consensus mechanism where Validators are required to stake a certain amount of coin in order to get rewards. And these Validators can stand a risk of losing their assets if they approve fraudulent transactions.
DIFFERENCES Proof-of-Work Proof-of-Stake With Proof-of-Work, in order to prove that you have computing power, you would have to basically turn on computers and constantly allow them to solve mathematically puzzles. This usually results to the consumption of a very huge amount of electricity. In Proof-of-Stake, instead of you proving that you have computers by constantly using them, what you need to do here to prove you have coins is basically to sign a digital signature with the same cryptographic key that has those coins. So here the network can run with a much lower energy consumption Example of coins that uses this type of consensus mechanism includes Monero, Ethereum, Bitcoin, Dogecoin, Kadena, Litecoin and so on.. Example of coins that uses this type of consensus mechanism includes Tezos, Cardano, Oxen, Algorand, Solana and so on.. In Proof-of-Work, the greater your hash rate, the better chances you get on creating the next block, as well as receiving the mining reward In Proof-of-Stake, the greater your staked coins, the better chances you get on minting the next block, as well as receiving the transaction fees as rewards.
Advantages of PoW
It is very expensive to attack the network due to the fact that an individual or group of individuals would need up to 51% of the whole network hash rate in order to be able to maliciously take control of the blockchain.
This type of consensus mechanism gives everybody the opportunity to mine for new blocks.
Disadvantages of PoW
The major disadvantage of the PoW mechanism is that it consumes so much energy when compared to other consensus mechanisms. The energy consumed in PoW is enough to power some small countries, and many people find a waste of natural resources.
Another disadvantage of the PoW mechanism is that it's slow and inefficient when compared to other mechanisms.
Advantages of PoS
The Proof-of-Stake is much more efficient when it comes to energy consumption, because there are no major needs for electricity usage.
Just like PoW, you equally need up to 51% of the entire coins supply in order to attack the network.
Disadvantages of PoS
- It is true that the right to adding a block is like a lottery, but your chances are basically related to the amount of coins that you staked. Which means that miners with little staked coins may never have the right to add new blocks to the network.
- In some cases, the selected Validators won't effectively do their work because of laziness, which is bad for the network.
Between PoW and PoS, Which one is better in scaling Capacity?
Scaling operations in Proof-of-Work usually requires the buying and setting up of more computers. It has been observed that blockchains using the PoW mechanism usually have scalability limitations because of high cost required in the running and maintaince of the computer systems.
But Proof-of-Stake uses less energy when compared to PoW, because in PoS Validators simply check the integrity of the transaction and adds it to the blockchain. So the Proof-of-Stake is better than the PoW when it comes to Scalability.
- Some examples of PoW networks are Bitcoins, Litecoin, Dogecoin, Ethereum and so on.
- Some examples of PoS networks are Solana, Tezos, Cardano, Algorand and so on.
Conclusion
Consensus is really a famous concept in the blockchain world and they are various types of consensus mechanism, and their main duty is basically to ensure that records are true and upright. Proof-of-Work and Proof-of-Stake are both among the first types of consensus mechanism and they are used by the top cryptocurrencies in the blockchain world. Thank you for your time.
Cc: @sapwood.
Designed by me using Canva
Question 1
What is the difference between PoW & PoS? Advantages & Disadvantages? Which one is better in scaling Capacity? Examples?
Proof-of-Work is no doubt the most popular type of consensus algorithm because it's the first type of consensus algorithm to be used by a blockchain network.
Proof-of-Work refers to a type of consensus mechanism where individuals/miners contend against their selves to solve a difficult puzzle, and the winner of the competition would get the right to validate new transactions into the block as well as receive rewards for their job.
Proof-of-Stake is the second most popular type of consensus mechanism because it came as a better alternative to the existing Proof-of-Work mechanism, and lots of blockchains started using it because of its speed and low energy consumption rate as compared to PoW.
Proof-of-Stake refers to a type of consensus mechanism where Validators are required to stake a certain amount of coin in order to get rewards. And these Validators can stand a risk of losing their assets if they approve fraudulent transactions.
| DIFFERENCES | |
|---|---|
| Proof-of-Work | Proof-of-Stake |
| With Proof-of-Work, in order to prove that you have computing power, you would have to basically turn on computers and constantly allow them to solve mathematically puzzles. This usually results to the consumption of a very huge amount of electricity. | In Proof-of-Stake, instead of you proving that you have computers by constantly using them, what you need to do here to prove you have coins is basically to sign a digital signature with the same cryptographic key that has those coins. So here the network can run with a much lower energy consumption |
| Example of coins that uses this type of consensus mechanism includes Monero, Ethereum, Bitcoin, Dogecoin, Kadena, Litecoin and so on.. | Example of coins that uses this type of consensus mechanism includes Tezos, Cardano, Oxen, Algorand, Solana and so on.. |
| In Proof-of-Work, the greater your hash rate, the better chances you get on creating the next block, as well as receiving the mining reward | In Proof-of-Stake, the greater your staked coins, the better chances you get on minting the next block, as well as receiving the transaction fees as rewards. |
It is very expensive to attack the network due to the fact that an individual or group of individuals would need up to 51% of the whole network hash rate in order to be able to maliciously take control of the blockchain.
This type of consensus mechanism gives everybody the opportunity to mine for new blocks.
The major disadvantage of the PoW mechanism is that it consumes so much energy when compared to other consensus mechanisms. The energy consumed in PoW is enough to power some small countries, and many people find a waste of natural resources.
Another disadvantage of the PoW mechanism is that it's slow and inefficient when compared to other mechanisms.
The Proof-of-Stake is much more efficient when it comes to energy consumption, because there are no major needs for electricity usage.
Just like PoW, you equally need up to 51% of the entire coins supply in order to attack the network.
- It is true that the right to adding a block is like a lottery, but your chances are basically related to the amount of coins that you staked. Which means that miners with little staked coins may never have the right to add new blocks to the network.
- In some cases, the selected Validators won't effectively do their work because of laziness, which is bad for the network.
Scaling operations in Proof-of-Work usually requires the buying and setting up of more computers. It has been observed that blockchains using the PoW mechanism usually have scalability limitations because of high cost required in the running and maintaince of the computer systems.
But Proof-of-Stake uses less energy when compared to PoW, because in PoS Validators simply check the integrity of the transaction and adds it to the blockchain. So the Proof-of-Stake is better than the PoW when it comes to Scalability.
- Some examples of PoW networks are Bitcoins, Litecoin, Dogecoin, Ethereum and so on.
- Some examples of PoS networks are Solana, Tezos, Cardano, Algorand and so on.
Consensus is really a famous concept in the blockchain world and they are various types of consensus mechanism, and their main duty is basically to ensure that records are true and upright. Proof-of-Work and Proof-of-Stake are both among the first types of consensus mechanism and they are used by the top cryptocurrencies in the blockchain world. Thank you for your time.
Cc: @sapwood.
Hello @prudent2,
You are labeled as task 6 completed as you have done Task 4 of Season 3 which is equivalent to Task 6 of season 4. Thank you for trying again but the review cannot be done as your already done the same topic earlier.
Ok I think it's now clearer to me now, because I was confused on how it was arranged. But now I understand that it was updated, so I will have to proceed to the next tasks
Your content does not match the title. Check and correct it.
Thanks for your observation and guidance Prof. @dilchamo, I have made the correction.