Crypto Academy Season 3 Beginners' course - Task 4: Different types of Consensus Mechanisms By @fabiha for Professor @sapwood
(1) What is the difference between PoW & PoS? Advantages & Disadvantages? Which one is better in scaling Capacity? Examples?
Before starting to talk about PoW and PoS let's understand their abbreviations.
• PoW stands for Proof of Work
• PoS stands for proof of stake
Let's understand its definition
Proof of stake
Proof of stake simply defines your mining power according to your mining coins quantity.it means that if you have more Coin mined, you have more power. your power is directly proportional to your mining coins quantity. PoS is part of a Blockchain network.
Proof of Work
Proof of work is a process to complete complex mathematical work that consists of blocks in the blockchain.
In Proof of Work, Computer competes with each other by solving works and tasks.
Proof of work is used in Crypto-currencies that on daily basis make their digital coins. POW requires lots of computing and work as its name implies Proof of Work.
What is the difference between PoW & PoS?
If we differentiate between PoW and PoS We will find the following findings:
In PoW it is difficult to find a solution but it is very easy to get the result. The performance of PoW is low. A Practical example of PoW is Etherium and Bitcoin.
In PoS if you have more share you have more power in a network. PoS has high performance as compared to PoW. A Practical example of proof of stack is Nxt, Tezos.
Proof of Stake Doesn't Let everyone mine for new blocks and therefore uses considerably Less Energy.
It's Also More Decentralized.
Advantages & Disadvantages?
Advantage of PoW:
The Advantage of PoW is it can easily be implemented in an environment where stack holders can not believe in each other.
DisAdvantages of PoW:
One of the main Dis Advantages of proof of work is the amount of energy and electricity that it costs to solve the mathematical equations to validate the block, it is very energy-consuming and also fewer transactions are able to be processed per second in these blockchains and another thing is the security flaw with proof of work mechanism there have been times in the past where a 51 Percent attack happened.
A Disadvantage of PoW is it has a high cost of implementation.
Advantage of PoS:
The Advantage of proof of stack is that it consumes a million times less energy than Bitcoin in order to process transactions you can also process transactions way faster couple thousand transactions per second while bitcoin is limited to about seven transactions per second.
Proof of Stake is Also safer from security threats since you actually have to stake your own money in the system in order to participate in the validation process it will deter fraud because people will lose their staked tokens once they are caught by the network however those are the benefits of uh proof of stake.
Another important advantage for proof of stake is that setting up a node for proof of stake-based blockchain is a lot less expensive compared to proof of a work-based one.
DisAdvantages of Proof of Stake:
The proof of the Stake Method is that those that are staking their tokens in order to receive the fees from the validation process will have a higher chance of being selected and make more money if they have more tokens state so obviously if you have more money staked into ADA you're gonna make more money back because you're gonna have a higher chance of being selected for the validation process however there is a second concern to proof of stake mechanisms and that is that it allows verifying transactions on multiple chains which proof-of-work doesn't the reason this could be an issue is that it may allow a hacker to perform double-spend attacks this is when someone sends funds to two different wallet addresses at the same time whereas in a proof of work mechanism the dishonest chain would simply be rejected so this is one issue that is Associated with proof of stake mechanisms.
Which one is better in scaling Capacity? Examples?
PoS is better than PoW as PoS is better in performance.
PoS model is best as it is energy efficient so that's the main reason stack holders prefer PoS. But keep in mind that the PoS model is less secure as compare to the PoW model. PoW model is secure as compare to PoS.
Examples
Etherium 2.0:
The scalability of the current ETH network supports around fifteen transactions per second this becomes a limiting factor when it comes to onboarding millions of new users and launching many more decentralized applications to make ETH more scalable eth2 aims at supporting thousands of transactions per Second one important caveat the increase in transactions per second should not come at a cost of increasing the size of the nodes.
I hope that you will find this very helpful material to get basic answers.
Special mention Professor:
.
@sapwood
@awesononso
regards,
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