Crypto Academy Season 4 Beginners' course - Homework post for Task 6: Different types of Consensus Mechanisms || By @usmanismail882
Introduction
Good day to you everyone, how are Y'all doing,? Welcome to my homework post for Task 6 - which is about Different types of Consensus Mechanisms, this course was taken by prof @sapwood, with his thorough explanation on the course, I was able to learn more about Proof of Work(PoW) and Proof of Stake(PoS).
Entry Question;
- What is the difference between PoW and PoS?
- Advantages and Disadvantages?
- Which one is better in scaling capacity?
- Examples?
What is Proof of Work (PoW)
Proof of work (PoW) can be said to be a decentralized consensus mechanism that requires a significant amount of effort in order to stop all kinds of bad uses of computing power, like sending spam emails or sending other malicious attacks to the system.
Proof of work (PoW) is mostly used in cryptocurrency in order to validate transactions and mining of new tokens, due to this PoW makes it easier for cryptocurrency to be run as a peer-to-peer system without the fear of third-party involvement in your transaction.
What is Proof of Stake (PoS)
Proof of stake (PoS) is a system that allows miners to mine based on the number of coins the miner holds, this concept makes it easier for miners to validate their transactions based on how many coins each miner has. It also shows that the more coins each miner have the more mining power they have and they will be less restricted in mining.
Unlike PoW where mining is more of energy consumption in order to fuel the computational power, whereas in PoS where the power of mining depends on how many coins a miner has in possession.
difference between PoW and PoS
- In PoW, mining a block depends on how much computational work is done by the miner, while in PoS, where the power of mining depends on how many coins a miner has.
- In PoW, rewards are given to the first miner that solves the computational puzzle of each block, while in PoS, miners are not rewarded but instead collect a network fee.
- In PoW, there are a lot of competition between the miners because they will strive to solve a difficult puzzle while using their computational power, while in PoS, there is not much competition between the miner because each miner will mine according to the number of coins they have.
In PoW, the system consumes less energy and is more efficient with low cost, while in PoS, the system consumes more energy at a higher cost of resources.
In PoW, in order to participate in PoW networks, the users have to purchase very expensive mining hardware, where the higher the investment, the higher the chance of creating a new block, while in PoS, the users hold a particular token that can be used to participate in a consensus algorithm, in this kind of network with lower barriers, everyone can become a validator.
Advantages of PoW
PoW provides a solid mechanism that is used for achieving consensus and also preventing misuses of the system, it also makes the system safer and more reliable.
In PoW, they add some kind of objectives to a system of peers who have their individual set of goals, it’s easy for blocks in PoW blockchains to identify the proper chain to follow without consulting a third party, this also makes it more reliable and makes the network have focus.
In PoW, their algorithm is quite simple in a way that no need to add any mechanism to the system any further, in this kind of algorithm, there is no need to design any penalties for bad actors because, for good and bad actors, it will incur expensive properties, equipment and also lots of energy cost.
Disadvantages of PoW
In PoW, the network is designed in a way that the cost of energy used in running the system is very expensive, also the Bitcoin blockchain has always been criticized since its inception of their network design choice because it makes many investors concerned about climate change also the consumption of natural resources.
In PoW, the mining is centralized. Like when Satoshi Nakamoto first architected Bitcoin, there was a vision of proof of work as “one CPU one vote” later on users weren’t able to follow such step and the network upgraded to GPUs then later to ASICs that are more powerful and efficient.
Advantages of PoS
PoS has a very low energy consumption which makes it a high-security incentive, it also has validators whose work is to watch the system for any foul play and when caught you will be directly taken away, this also shows that PoS has more energy-efficient compare to what PoW requires, while preserving the same level and sometimes an even higher level of security which countered that of PoW.
PoS makes blockchain more scalable and also enhances decentralization, this also allows more groups or individuals to participate, the flexibility of the network allows protocol designers to be able to solve some of the issues been faced in PoW like mining centralization.
Disadvantages of PoS
PoS is like a new invention compare to PoW blockchain, it also has a more complex design because it stimulates what PoW delivers and tries to do better which brings about more complicated rules and full of contingencies, with how complex PoS, this makes it more difficult to compromised for every contingency in advance.
One the main issue PoS has is the say of “Nothing to stake” which state that since there is not much if any economic cost associated with creating multiple competing transaction history, then attackers are free to do so at low cost, having many competing, the potential validator makes consensus around a true history difficult.
Which one is better in scaling capacity
Scaling Capacity alludes to the limit of the association to help a larger number of occasions. I believe the above discussion, shows that Proof of stake (PoS) is more scalable compared to (PoW) because it shows that PoW has a limited capacity of scaling, it also shows that PoW can hardly be altered not like PoS where you can make different changes on it in order to perfect the system.
Examples
Some of the examples of a scalable blockchain are Cardano, Solana
Cardano
Cardano is a decentralized cryptocurrency that is designed to run a proof of stake (PoS) system, where the platform will be more efficient and alternatively to the Proof of Work (PoW) network, where the network is not limited by the use of energy, the growing cost and also the time it takes to complete a transaction, all this makes the network scalable compare to PoW.
Solana
Salona is also known as SOL is an open blockchain that runs a decentralized open-source network that achieves consensus using a PoS system, this also allows transaction throughput to scale proportionally with network bandwidth satisfying all properties of the blockchains like scalability, security, and Decentralization. the network also has over 200 physically distinct nodes supporting a throughput of more than 50,000 TPS when running with GPUs.
- Vertcoin
- Verge
- Bytecoin
- Zencash
- Bitcoin
- Ethereum classic
- Dash
- Decred
- Primecoin
- Tezos
- Decentral Games ($DG)
- DASH
- PIVX
- Akash Network (AKT token)
- Flow Token
- BNB
Conclusion
With what we've learned it is clear to us that PoW also runs a decentralized system where it requires a huge amount of energy in order to stop all kinds of malicious attacks, it also helps to validate transactions and mining of new tokens, due to PoW it makes it easier for cryptocurrency to be run as a peer-to-peer system without the fear of third-party involvement in your transaction. And Proof of Stake (PoS) network also is a type of system that allows miners to mine based on the number of coins the miner holds, this concept makes it easier for miners to validate their transactions based on how many coins each miner have, all this concept makes us understand that even though operating PoW cost more energy, it also shows that it provides a solid mechanism that is used for achieving consensus.
Thank you all for reading up!! Meet with you next time!!
Special regards @nane15
#club5050 😀