Crypto Academy season 3 Beginner's Course: Homework post for Task 4 - Proof of work and proof of stake
Greetings to everyone here. I would like acknowledge Prof @sapwood for this wonderful lessons to us as whole. I find this task to be very crucial and educative to the community, and I would like to answer the following questions given, for this particular lesson.
What is the difference between POW and POS ? Advantages and Disadvantages? Which one is better in scaling capacity? Examples?
Brief Introduction
Proof of Stake and Proof of work can be outlined in general to be a consensus mechanism that are used in the synchronization of nodes, and the confirmation of legitimate transactions within the blockchain.
Source
Proof of work:
This is a consensus algorithm where by there is an agreement between blocks to initiate and complete transactions within the blockchain. Blocks within the network find solutions to some difficult cryptographic problems and be certain with the legitimacy of transaction before confirmation. Different systematically connected nodes help in solving problems to validate and initiate transactions independently and differently. Such consensus mechanisms are normally used by Bitcoin, where confirmation of transactions within that chain last for some period of time.
Source
Proof of stake:
This is also a consensus mechanism where by the number of coins owned by a person would determine whether if one is qualified to validate or mine transactions within the network. Therefore, the higher the coins, the more the mining power. The PoS was developed by Scott Nadal and Sunny King mainly as an improvement of the PoW. The PoW mechanism contribute to high cost. Project with these kind of mechanisms were adopted by the Bitcoin blockchain.
DIFFERENCES BETWEEN PoW AND PoS
| Proof of Work | Proof of Stake |
|---|---|
| 1. High consumption of energy | Less consumption of energy |
| 2. Depend on the work done by the miner | Depend on the number of coins one own |
| 3.Mining community is centralized | Mining community is decentralized |
| 4. Very expensive | less expensive |
| 5. Transaction time is about 10 minutes before generated | Transaction time is about 15 seconds before generated |
| 6. Was developed by Satoshi Nakamoto | Was developed by Scott Nadal and Sunny King |
ADVANTAGES & DISADVANTAGES OF PoW
ADVANTAGES
Ddos attack is less due to high security protection and also miners that own some Cryptocurrencies might have inhibit low fractions.
The PoW has some important cryptographic problems that, who ever has solutions to these problems would be rewarded based on his/her transacted coin used, which can either be in BTC. These are one of the most valuable consensus mechanism amongst miners in the network.
Many participants are being restricted to a certain considerable actions on the network.
DISADVANTAGES
The PoW uses much time to confirm transactions as compared to that of the PoS. Where few transactions would be confirmed within longer period of time.
Computers within the PoW highly consume electricity which makes it very costly and expensive.
It centralized, thus, there is a third party to validate the transaction being processed. unlike the decentralized which does not need any third party to confirm transactions.
ADVANTAGES & DISADVANTAGES OF PoS
Short period of time is used in validating of the transactions within the network.
Many transactions can be processed within a shot period as compared to PoW.
Less energy from electricity is used in the PoS, therefore, it's less costly.
It is decentralized. Therefore, has no authority in charge to control the confirmation or validation of transactions within the network system.
DISADVANTAGES
Has less encrypted security transparency as compared to that of PoW.
Decisions can be made by High rank stakeholders without the consideration of the low rank stakeholders.
Better consensus mechanism as regards to Scalability
PoS has a better consensus mechanism as compared to PoW from the lessons noted. This is because, transactions within the PoS takes less time to be confirmed with no any third party to be involved.
For example, when the Eutherum blockchain changes codes in the PoW, in shifting the PoS process, there is a limited period of 15 seconds for confirmation. Sometimes the PoW usually takes more than 10 minutes to confirm transactions, which makes PoS to be more better than the PoW as whole.
Eg: Coins with PoW Networks are Bitcoin, Ethereum etc.
Eg: Coins with PoS networks are STEEM, Blackcoin, NXT and NEO.
written by @hmohammed14
Cc; @sapwood