Crypto Academy Season 3 Beginners course - Task 4: Different types of Consensus Mechanisms by @doctor23

I will begin by defining proof of work and proof of stake before going to their differences.

Proof of work is just a mechanism that is used to determine how blockchain reaches consensus. Proof of work uses the cryptography method which is an advanced mathematics type.
Crytocurrencies get their names from the name cryptograph.

Proof of Stake is another model that was created after the proof of work mechanism. It was created by Scott Nadal and Sunny King in the year 2012. One of the main reasons for the creation of proof of stake is that, the proof of work required a lot of electricity in its usage, as it utilised about $150,000 of electricity on a daily cost. The proof of stake is just a mechanism like proof of work, but it more scalable in its transaction andd uses less electrilcity. It is also argued to more equal and fair in its mining system.

Difference between proof of work and proof of stake.

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ENERGY USAGE

In proof of work, the energy usage is costly up to about $150,000 per day. With these, it tends to be really costly.
Unlike in proof of work, the nergy usage in the proff of stake is really minimised. In the proof of stake, it does not determines who proposed the block based energy. The proof of stake is determined as energy efficient: which is one of the main reasons that it was introduced.

Also, still under usage, in the proof of work mechanism, the miners have the opportunity in choosing any energy source they wish to use. This energy sources include:

• hydroelectric power
• wind
• sloar
  And others.
  In proof of stake, it requires the usage of specialized hardware called the GPU, which is used ti produced resources.

Internet connection

In the proof of stake mechanism, the miners are required to maintain active internet connections, and this often requires a lot of energy expenses,
but still when compared with the proof of work mechanism, it is far less, though the proof of work mechanism does not necessarily requires an active internet connection.

Reward Potential

In the graph above showing the reward potential, the graph of investment in dollars against reward potential in dollars in proof of work shows an exponencial graph.
in the graph of proof of stake, it shows a linear plot. Which determines how the blockchain reaches a consensus.

Miners

In proof of work, the miners are required to solve complex equations. And the winner is often determined by the individual with the most powerful hardware device.
In proof of stake, the model will always radomly choose a winner which is totally based on the amount they have stake.

Verification

In the proof of stake mechanism, it allows verification on multiple chains, where as in proof of work it does not.

Advantages of Proof of Work

• The proof of work model is always determine as more difficult, making it too costly for attacks.
• The proof of work model is termed a decentralized model, because it results most often in decentralised results.
• in the proof of model, it rewards miners a share of the transaction fee as well as a block reward making it advatageous.

Disadvantages of Proof of Work

• The major disadvantage of proof of work is that is consumes a lot of energy. This often calls a lot on the environmental concerns.
• proof of work is determined far less efficient when compared with proof of stake.
• Another draw back of the proof of work mechanism is security concerns. Adequate security is guaranteed only when there is a large network of miners competing for block rewards.

Advantages of Proof of Stake

• The major advantage of the proof of stake mechanism is that its algorithm are energy efficient. The proof of stake allows a greater number of participants in running nodes solely because they are affordable and easy.

• In proof of stake, the mining power are attributed to miners in proportion to coins held. This utilizes energy.

• The proof of stake mechanism turn to be more secure than the proof of work model.

Disdvantages of Proof of Stake

• Since the reward mecahanism in the proof of stake reward radomly the winner as the one based on the amount staked, it is often said that the the proof of stake mechanism helps the rich get richer which is a disadvantage.
  -The proof of stake mechanism allow verification on multiple chains. This is argued that it might allow hackers to perform double spend attack.

Why is Proof of Stake better.

The proof of stake mechanism offers consistency. The Byzantine fault Tolerance has shown this clearly in the scalability of the proof of stake model. This is because validators are often choosen at random for each round; which they agree or deny to agree if the block will become part of the chain.

In scaling capacity, the proof of stake is better because, in the proof of stake model, the hackers often face a lot difficulty in their attack because, in a 51% attack, the hacker will obtain only 51% of the crypocurrency, which makes it far less important for attackers.

Also, the proof of stake mechanism has proven to be better for the environment when compared with the proof of work mechanism making it quite scalable.

Conclusion

The Proof of stake mechanism has proven to offer a lot of solutions to the scalability of bitcoin and also the drawbacks of the proof of work mechanism. This has permitted the processing of thousands of requests.

CC: @sapwood