Crypto Academy Season 3 Beginners' course - Task 4: Different types of Consensus Mechanisms

QUESTION 1

WHAT IS THE DIFFERENCE BETWEEN POW AND POS? ADVANTAGES AND DISADVANTAGES? WHICH ONE IS BETTER IN SCALING CAPACITY? EXAMPLES?

INTRODUCTION: hello friends i greet you all, i am so glad to be here today to discuss with you on my homework task in this task i elaborated and simplified the question which was well explained by Professor @sapwood.

Brief introduction about proof of work (pow) is a consensus mechanism which require a lot of computing effort to solve complex mathematical puzzle, where by Miner verify whether the transaction are authentic by solving a cryptographic puzzle, the first one to solve the puzzle get rewarded.

Proof of stake (pos) is a deterministic approach in which block creator are chosen base on the number of stake which means the number of Coin or token one own in he or her crypto-wallet so someone with a bigger stake have a high opportunity to become a validator to mint a block.

Source

THE DIFFERENCE BETWEEN PROOF-OF-WORK(POW) AND PROOF-OF-STAKE(POS)

(i•) VALIDATION OF BLOCK

• Pow: Consensus mechanism requires a lot computing effort to solve complex mathematical puzzle, in which miner verify whether the transaction are legitimate by solving a cryptographic puzzle the first one to solve the mathematical puzzle get rewarded. While
•Pos: does not involve mathematical puzzle, it is a deterministic approach in which block creator are chosen base on their stake, which means the the number of Coin or token one own. the bigger the stake the bigger the opportunity to become avalidator to mint a block.

(ii•) COST AND ENERGY

•Pow: is energy inefficient, since it require a lot of computing effort to solve complex mathematical puzzle, miner uses a lot of machine which are very expensive and the machine consume a lot of electrical energy. While
•Pos: is energy efficient, it does not require large machines and electrical energy to compute, so it's cost and energy are efficient, it does not require a Mining rig.

(iii) MODE OF OPERATION

•Pow: is Decentralized, it mode of operation is Decentralized in which miner can be selected at random, which implies that anyone can become a miner.
While
•Pos: is centralized here only those that stake higher have the chance to become a validator to mint a block. so not everyone can be a miner it mainly favour those who have more stake.

(iv•) SECURITY
•Pow: it is more secure than pos while
•pos is less secure than pow

ADVANTAGE OF PROOF-OF-WOOk(POW)

(i•) Selection of miner is random, so it is favourable to all, anyone can become a miner.
(ii•) Decentralization anyone can join the platform, it is not control by any group of people or individual there is no test of becoming a participant.

DISADVANTAGE OF PROOF-OF-WORK

(i• ) Energy Inefficient it require a lot of computing effort to solve complex mathematical puzzle, so miner uses a lot of machine which are expensive and consume a lot of electrical energy.

ADVANTAGE OF PROOF-OF-STAKE

(i•) It does not not require a Mining rig
(ii• )It is energy efficient, since it does not use computing machine that consume electrical energy.
(iii •) Pos enable stakeholders to end better reward
(iv•) Pos help the price dynamic of the token as a certain percentage always remain locked.
(v•) It is very favourable to those that have enough stake, especially the rich, so the rich that have higher stake will keep going rich.

DISADVANTAGE OF PROOF-OF-STAKE

(i•) It is less secure than the pow
(ii•) it is only favorable to those that have enough stake, the higher the higher the chance to become a validator to mint a block.
(iii•) It is centralized, not everyone can be a miner or a participant, and it is been **
control by few people.

WHICH ONE IS BETTER IN SCALING CAPACITY

Proof-of-stake (Pos) have better scaling capacity

EXAMPLES

Example are
( i•) TEZOS
(ii •) DASH
(iii •) NEO

CONCLUSION: i sincerely thank professor @sapwood for his great lecture also I appreciate you all for reading my post.