Crypto Academy Season 5 Beginners' course - Task 6: Different types of Consensus Mechanisms
There are various types of consensus mechanisms which are the proof of work, proof of stake, delegated proof of stake, proof of burn, proof of brain which is utilized by the steemit platform. Etc but the ask centered on proof of work and stake. Let begin our discussion.
In these tasks, I'll be writing on the difference between POW and POS consensus mechanisms, the pros and cons as well as the one that has better scaling capacity
before I start outlining the differences let briefly understand what proof of work and stake is all about.
- PROOF OF WORK
The proof of work system was developed to secure digital money, malicious use of computing power, etc. In other words, the pow is a decentralized mechanism that mandates members of the network to widen their effort by solving a mathematical puzzle so nobody can game the system.
The proof of work is utilized widely in crypto space usually for mining, to validate transactions as well as mining current tokens.
The execution of proof of work made digital currency transactions to be peer to peer eliminating the need for a middle man who has to be trusted. These peer to peer is more secure. As the individuals involved in the transaction can carry it on with a third party.
The proof of work function in the bitcoin network, we all know that bitcoin is a digital currency that is underpinned by a way of distributed ledger which is the blockchain. In this ledger, you can find all bitcoin transactions settled in a sequential block preventing users not to consume their holdings double.
- PROOF OF STAKE
The proof of stake was built as an alternative to the proof of work. Here a miner becomes a more influential base on the number of coins they hold. This signifies that the Moore coin the miners have the higher the mining power. The proof of work has a scalability issue so the proof of stake was established to solve this issue, also is beneficial because it helps to reduce the risk of being attacked by miners.
- DIFFERENCE BETWEEN POW AND POS
| Proof of work | proof of stake |
|---|---|
| In proof of work, the chance of mining a block is devoted by how much computational work is done by the miner | In proof of stake, the chance of validating a block is Based on a large number of coins hold or staked by the miner |
| In proof of work the miner that solves the cryptographic puzzle get the reward first | In proof of work validator only receives network fee as their reward, no block reward. |
| In proof of work for a malicious block to be added, the hackers need computational power of about 51% | in the proof of stack hackers will have to own about 51% of all digital currency on the network before it can be hacked this is not possible. |
| In proof of work, there must be technical tools to enhance processing power | while in proof of stake quality server-grade unit is sufficient |
| A fresh coin is mine in proof of work | while in proof of stake fresh coin is not mined. |
- ADVANTAGE OF PROOF OF STAKE
It solidifies the blockchain network making it hard to be attacked.
Miners get both block and transaction fee reward
Proof of work mechanism frequently brings about more decentralized organizations.
Proof of work has a strong security network
Lesser fee when a transaction is carried out
- DISADVANTAGE OF PROOF OF WORK
need access to significant with boosting computational power, which is a bit time-wasting each time an equation is solved.
excessive energy is consumed in proof of work mechanism thereby leading to an increase in cost and environmental impact.
bring about long-haul disincentives to mining as recently stamped digital Currencies close to the cap.
in proof in other to earn you will solve a mathematical equation which is a bit hard.
- the power consumption needs Maintainance so the fund to Maintain it is usually high.
- ADVANTAGE OF PROOF STAKE
there is no solving of mathematical equation thereby is no time wastage.
proof of stake mechanism gives a good reward for the node which stakes their cryptocurrency.
proof of work does not need computational power
cost of maintenance is low
validators get repaid in case the system is attacked by hackers.
- DISADVANTAGE OF PROOF OF STAKE
The system is less decentralized
the proof of stake system is less secure as well as less vulnerable to low-cost assault.
transaction is limited in the proof of stake system
validators with a higher number of coins are influential to the ones with a lower number of coins
- when a coin is staked it can not be withdrawn until the agreed period is reached
- WHICH HAS THE BEST SCALING CAPACITY
To this question, ill say that the proof of stake has the best scaling capacity with my following reasons. It can enforce as well as complete manny transaction is less time frame. Also, the transaction is fast with a low fee charged.
It does not waste time as validators do not need to solve mathematical equations before getting a reward also the high cost of Maintainance is relatively low and affordable.
- FINAL TAUGHT
An interesting topic is chosen by the professor to educate us on the consensus mechanism which I have learned a lot and try my best to put down my homework task. By the result of this lesson I now have an idea that the proof of work is always better than the proof of work when it comes to scaling capacity, having the ability to enhance many transactions.
Thanks for reading through
@dilchamo
