Steemit Crypto Academy Season 4 Beginners' course - Homework post for Task 6: Different types of Consensus Mechanisms By @jerryofkingz

jerryofkingz (59)Beginner[1,2,3,4,5,6,7,8,9,10]in SteemitCryptoAcademy • 3 years ago

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TASK-6

QUESTION 1:

WHAT IS THE DIFFERENCE BETWEEN PoW & PoS?
ADVANTAGES & DISADVANTAGES?
WHICH ONE IS BETTER IN SCALING CAPACITY? EXAMPLES?

PROOF-OF-WORK(PoW)

_{proof-of-work}

proof-of-work in other words a “fault-tolerant mechanism” used in the validation of transactions on a decentralized system Which requires miners who are a group of people to solve the “cryptographic puzzles” in a blockchain transaction in other to ascertain or confirm a transaction in a decentralized blockchain using high computing energy. This group of people or miners receive some amount of rewards which is dependent on the energy power of the computer system been made use of. Ethereum, litecoin, and bitcoin are popular coins that make use of the proof-of-work(PoW) consensus mechanism.

PROOF-OF-STAKE(POS)

_{proof-of-stake}

In Proof-of-stake, owners of a token or coin confirm block transactions in a blockchain which is dependent on the amount of coin or token held, with a return as a reward from mining which is proportional to the amount of coin or token staked or held. This very type of “consensus mechanism” is mostly seen in alternative coins such as Algorand, Cosmos, Avalanche, and the rest.

DIFFERENCE BETWEEN PoW & PoS

source

Proof-of-work	Proof-of-stake
Coins are sold by miners to foot the bill	Percentage of coins held by miners increases their mining power
PoW is more secured, due to its level of decentralization	PoS tends to be centralized, hence less secure
Selection of miners in PoW is done randomly	selection of miners is dependent on their stake
PoW is energy inefficient	PoS is energy efficient
PoW requires a mining rig	PoS does not require a mining rig
PoW requires large computing energy to validate transactions and receive mining rewards	PoS requires a large number of coins or tokens to validate its transaction and receive a mining reward

ADVANTAGES AND DISADVANTAGES OF PoW & PoS

ADVANTAGES OF PoW

It's a decentralized consensus mechanism making it a highly secured blockchain
Miners are equally rewarded due to the concept of random selection.
decision of the entire network is not dependant on large capital holders.

DISADVANTAGES OF PoW

A very high Electricity consumption
A slow transaction process
Low amount of validated transactions per minute.
High computing resources is been needed to carry out mining.

ADVANTAGES OF PoS

Use of low computing resources In mining
A fast transaction process

Validation of multiple transactions per second
Low electricity consumption

DISADVANTAGES OF PoS

Tends to be centralized making it a lesser secure network compared to PoW.
Miners have no chance of equal reward due to nonrandom selection but stake power proportional to their stake in the blockchain.

This deals with “computing hardware” making it prone to attack by malware.

WHICH IS BETTER IN SCALING CAPACITY? EXAMPLES?

When we talk about “scaling capacity” we talk about scalability. Firstly, what's the meaning of the word “scalable”?. This is the power of a particular product's (for instance )value to either rise or depreciates which is dependant on people's demand.

Scalability is the measure of a system's ability to increase or decrease in performance and cost in response to changes in application and system processing demands.
source.

Then the word “capacity” is another word we should understand, and this is the ability or power of a substance or system in carrying out a function or duty.

the amount that something can produce
source

“Scaling capacity”
This is the level of proficiency of a system or program in regulating reliable delivery performance and maintenance of the growth of the system positively. Relating to cryptocurrencies I would say that the “proof-of-work”(PoS) system is a more scalable consensus mechanism to the proof-of-work(PoW) why?. Because in the PoS, less energy consumption is required to validate the transaction. Multiple transactions can be ascertained in a couple of seconds. All these tends to quicken the rate of transactions making it a more profitable and accessible consensus mechanism compare to the PoW. “Ethereum” as a decentralized cryptocurrency tend to adjust its system from the use of “proof-of-work(PoW) to proof-of-stake(PoS) by end of 2021.