Proof of work and proof of stake - Steemit Crypto Academy Season 5 // Homework Post for Task 6
(1) What is the difference between PoW & PoS? Advantages & Disadvantages? Which one is better in scaling Capacity? Examples?
(2) What is the difference between PoS & DPoS? Advantages & Disadvantages? Name a few Blockchain projects which use the DPoS consensus mechanism and indicate the scaling capacity?
(3) Name a few Blockchain projects which use dBFT in combination with other consensus mechanisms? Indicate the scaling capacity? Explain dBFT along with the pros and cons?
I will be tackling the the first question. Which is,
What is the difference between PoW & PoS? Advantages & Disadvantages? Which one is better in scaling Capacity? Examples?
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PoW;
Proof of work is the full meaning of the acronym PoW.
PoW is one of the mechanism of a blockchain technology or a consensus algorithm in blockchain network that is being used in the verification of transactions and creating new blocks in a blockchain. In a PoW consensus mechanism, a group of people known as minors compete with each other by mining in the network'stransactions. The vrification of the transaction is being done by an individual who works the problem of the hash algorithm to decrypt the transaction details and there by approving them by adding them to the block chain(creating a new block). These individuals decrypt the complex algorithm are known or referred to as the miners.
These individuals (miner) are being rewarded when he successfully decrypts an algorithm or creates a block. There is a lot of challenge before one can successfully decrypt an algorithm or create a block. Most of the cryptocurrencies works with PoW technology, including bitcoin(first cryptocurrency to beinvented).
PoW uses the principle of mathematical puzzles in solving it complex algorithm problems.
PoS
PoS which also stands for proof of stake consensus mechanism technology which is being used by blockchain networks for verification of transactions.
Proof of stake changes the way blocks are being verified by using the coins of an individual (owner). The owners offer their coins as a guarantee for the chance to validate blocks. These coin owners with staked coins becomes validators after staking a particular amount of a blockchain currency. If one is not a validator, then hes is an attester. Attester in a PoW consensus mechanism is simply someone who bear witness of the validator before the verification of transaction and a block been minted.
Owners who stakes large has an upper hand on the blockchain network over others.
Taking a look at difference between PoW & PoS?
You have to keep in mind that PoW and PoS are similar as they are both used for transaction purposes.
Below are some of the differences.
| Proof of work (PoW) | Proof of stake(PoS) |
|---|---|
| When mining PoW it leads to the increase in supply of the coin on the blockchain network. Therefore your mining reward are given in new coin. | whereas in PoS mining does not increase the supply of the coin on the blockchain. This is as a result of the procedure for verification is different. |
| It tries to make use of the miner and the mining process for the verification of transaction . | In PoS the owner of a coin is what is being used to choose a validator for verification. |
| PoW rewards it miners with a new coin for every successful mine. | PoS rewards with only a validation fee to a validator. |
| The consumption of energy required in the mining process of PoW is very high. Therefore it requires high energy usage. | PoS uses minimal energy consumption due to the staking. |
| The security required in PoW consensus mechanism is made possible by the high cost mining resources and it hardware. | The security of PoS is made possible due to the inability of one miner or user to stake more than half of the coins in the blockchain network. |
The Advantages & Disadvantages of PoW and PoS;
Advantages of PoW
*PoW consensus mechanism is highly secured and very difficult o be tampered by hackers or miners.
*PoW rewards it miners with a new block for a successful verification of transaction Which is as a reward for the work(mining on the blockchain).
*PoW works on a decentralized network there by making everything transparent on the network.
- PoW does not require any personal identification before one can verify his ir her transactions.
Disadvantages of PoW
*PoW consumes a higher energy there by making mining unsatisfied for miners due to the high cost.
*The high cost of mining hardware and it's management makes it unbearable for some miners thereby leading the majority of them to centralisation.
*PoW's mathematical puzzles makes the blockchain transaction authentication a problem for most users.
- Because of the rewards gained or earned by miners is a new coin, it renders blockchain in the need or supply of more coins.
Advantages of PoS
PoS requires minimal energy consumption as compared to PoW. This because PoS does not use of the mining process for verification of transaction.
PoS is decentralized in a way that it miners are chosen randomly.
PoS transaction has a a very high speed. Which is as a result of the mechanism behind it.
- It does not make use of hardware thereby rendering it cost to be low.
Disadvantages of PoS
Selling and staking of coin at the same time is not possible when dealing with the mechanism of PoS.
PoS works with the stalking of coin which gives user with the larger stake the upper hand on the blockchain network.
It liquidity is very limited.
PoS is sometimes referred to as a centralized network. Which is because individual with large amount of token are allowed to mine on that network.
Which one is better in scaling Capacity?
Scaling is the power of a consensus mechanism to increase or double the number of transaction it can verify per minute. It allows a block to take in more transactions due to the change or increment in time.
With this one can boldly say that Proof of stake(PoS) is more better at scaling Capacity. Because it is very fast in terms of transactions.
Examples of some PoS are
Algorand;
Algorand uses the mechanism of proof of stake there by making it fast and secure on the blockchain network.
BNB;
It is the traditional coin for the binance blockchain exchange. It also uses the PoS mechanism.
Cardano
Cardano maske use of the proof of stake mechanism too to run its own blockchain system. It was invented with the intention of solving scalability problems. As some of the major coins face.
In conclusion Conclusion, proof of work and the proof of stake has made blockchain a good means of currency transactions. Also PoW is good but with it requirements for more energy consumption makes PoS best. When comparing the two.