Crypto Academy Season 3 [Beginner's Course] Homework post for Task 4: Consensus mechanism for Prof. @sapwood by @cinnymartins

I must say I am very delighted to be attending Task 4 of the crypto Academy and am giving a well-deserved accolade to the Prof. @sapwood for delivering such a detailed lecture. So out of the three questions to answer as usual, I am choosing the first question which is:

(1) What is the difference between PoW & PoS?

Advantages & Disadvantages?

Which one is better in scaling Capacity? Examples?

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What is the difference between PoW & PoS?

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Before delving into their differences, it would be pertinent to give a succinct definition of both terms PoS and PoW bearing in mind that both are consensus mechanism which refers to a means of reaching an agreement on the Blockchain.

PoW is an acronym for Proof of work. It is a type of consensus mechanism and popularly known amongst other consensus mechanism because it was first used by the crypto prototype which is Bitcoin.

PoW is a consensus mechanism that exerts energy to put away harmful use of computing powers. The essence is to ensure an undisrupted network in the Blockchain.

PoS is an acronym for Proof of stake. It is also a type of consensus mechanism used in validating transactions. Under this consensus mechanism, your influence as a Miner is dependent on the number of coins or assets you have.

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DIFFERENCES

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• PoW invest in buying hardware and those hardwares are not cost effective and for this reason some persons don't get to participate in the mining whereas PoS is more interesting in building reputation.

• In PoW, miners are expected to validate transactions and this is done by solving a computational puzzle whereas in PoS validators are selected depending on acquires the highest stake.

• There is high exertion of energy (and for this reason some countries banned mining rigs) in PoW as it basically requires computing powers whereas there is little or no consumption of energy in PoS as it does not require any computational puzzle.

• In PoW, the first is been rewarded for being able to find answer to solve the mathematical puzzle whereas validators in PoS are being rewarded collectively in the form of a network fee.

• PoW is less energy efficient with regards to electricity as it consumption of electrical energy even within a day is very costly whereas PoS does not require such electricity energy and hence, it is cost effective in this regard.

• PoW was used by the first cryptocurrency Bitcoin while in PoS the reputation of a miner is dependent on variants like: COSMOS, ATOM and many other.

• PoW is more of a decentralized system than PoS this is because PoS run a centralized system with only those who have higher reputation in the system and for this reason, Decentralization which is the main objective of cryptocurrency is defeated in PoS.

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Advantages & Disadvantages

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Advantages of PoW

1. PoW is first and only a decentralized system and there lies its uniqueness.
2. Miners in PoW validate transactions without relying on any condition of having a higher stake.
3. There is immutability in PoW as the Blockchain is safe and makes no room for network disruption.

Disadvantages of PoW

1. There is a high consumption of energy in PoW than in PoS.
2. The cost of installing and operating a mining is high therefore only few can afford it.
3. It is security threatening: The number of miners determines the level of security of the system. Where the miners are limited, it poses a lot of threat to the system making it easier for hackers to attack.
4. There is a waste of resources: Once the first miner finds the answer and is being rewarded, other miners are left with nothing.

Advantages of PoS

1. The consumption of energy level in PoS is less.
2. It has a more secured system.
3. The validators can sell their collateral whenever they want.
4. It is cost effective.
5. The validators are rewarded collectively.

Disadvantages of PoS

1. Transactions are validated in PoS on the condition of number of stakes.
2. Stakeholders are also rewarded based on the three amount staked.
3. The aim of cryptocurrency which is Decentralization is defeated in PoS.
4. People who can't afford certain number of coins are incapacitated as they cannot invest in PoS.

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Which one is better in scaling Capacity? Examples?

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Scaling capacity by way of definition is the ability of a network to carry out as many transactions as possible within a limited period of time. And of which PoS had a better scaling capacity than PoW for the following reasons:

1. Launching an attack on PoS is difficult if not almost impossible as hackers need to have almost have almost half amount of the crypto currency before such attack can be successful.
2. The fact that it handles multiple transactions at a time without disruption.

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Conclusion

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I want to say a hearty thank you to Prof. @sapwood for his perfect delivery on the lecture as I was able to grab and get familiar with new concepts like PoS, PoW in the course of my research and it's all thanks to him.