Crypto Academy Season 3 Beginners' course - Task 4: Different types of Consensus Mechanisms [POW & POS]-Homework

Question:1
what is the difference between PoW and PoS? Advantages and Disadvantqages? Which one is better in scaling capacity? Examples

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Proof of Work: is an agreement that demand some work, to put off any malicious use of computing power, such as sending spam emails and others.example; Bitcoin, Ethereum, Litecoin etc.

Proof of Stake: is an agreement that validates block transactions based on the number of coins you hold or retain. This means that, the more coins you have as a miner, the more power you have.example; Tezos (XTZ), Cosmos (ATOM), Lisk (LSK) etc.

Difference between Proof of Work (PoW) and Proof of Stake (PoS) in blockchain :

1. The possibility of mining a block is measured by the amount of computational work done by the miner. Whilst ,The possibility of validating a new block is measured by the amount of coins possessed by the person.

2. Proof of work rewards the first miner who is able to solve the cryptographic puzzle of all or each block. Whilst, Proof of stake validator recieve network fee as a reward.

3. Proof of work uses more electricity energy of an estimated amount of $151,000 each day, which is very costly. Whilst, Proof of Stake systems uses less electricity energy with low cost, which is considered as energy efficient as compare to proof of work.

4. Basically proof of work invest in buying hardware. Whilst, Proof of stake invest in buying stake and building reputation.

5. A Proof of work consensus building algorithm uses bitcoin well known crypto function as SHA256. Whilst, Proof of stake Some of cryptocurrencies that use different variants of proof-of-stake consensus building algorithm uses various variants such as; Tezos (XTZ), Cosmos (ATOM), Lisk (LSK) and many more.

Advantages Of Proof Of Work

1.The proof of work system seen as a decentralized system, because it results are often in a decentralized form.

2.Proof of work rewards miners a share from the transaction fee and block reward.

3.The proof of work system is costly, making it difficult for attackers.

Disadvantages of Proof of Work

1. The proof of work consumes a lot of energy, which affects environment as compare to proof of stake.
2. Proof of work calls for security attention, because it needs large network to guarantee adequate security.

Advantages of Proof of Stake

1.The proof of stake system is less energy consuming (energy efficient).

2.The mining power in proof of stake are ahared in ratio to the coins retained or held.

1. The proof of stake system is seen as more safety (secure) than the proof of work.

Disdvantages of Proof of Stake

1. The verification on multiple chains in proof of stake may give the hackers the opportunity to make a duplex spend attack.

2. The reward in the proof of stake system is radomly, based on amount staked, which only helps the rich to get richer.

Why is Proof of Stake better in scaling capacity

The proof of stake system is stable in scalability.This is because validators are mostly selected randomly for each round, where they either agree only if the block will become a portion of the chain.

Interms of scaling, the proof of stake is better because, the hackers mostly faces difficulties in their attack, in the sence that a 51% attack, the hacker is only entitled to get 51% of the crypocurrency, which is not beneficial to them.

In addition, the proof of stake system has been proved to be good for the environment as compared to the proof of work system, thereby making it, a bit scalable.

Conclusion

From the look of things, it clearly indicates that the Proof of stake system has provide more solutions to the scalability of bitcoin and the effects, the proof of work system has on the environment. In fact this has really helped in conservation of energy for future generation.

Thank you

CC: @sapwood