Crypto Academy Season 3 Beginners' course - Homework Post for Task 4: Blockchain Consensus Mechanism

Hello everyone, this is my work for the 4th task of the introductory courses of the academy. Many thanks to professor @sapwood for the class, excellent explanation and easy to understand.

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Homework task 1

What is the difference between PoW & PoS? Advantages & Disadvantages? Which one is better in scaling Capacity? Examples?

♦1.- What is the difference between PoW and PoS?

Before explaining the differences we must know that it is Proof of work (PoW) and Proof of Stake (PoS) and we must also know that it is a consensus protocol.

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• Consensus protocol: is the mechanism that regulates the relationship between the nodes that support a blockchain, without the need to trust third parties or centralized actors.
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• Proof of work (PoW): This is a consensus protocol where miners make available their computers which must work to solve a cryptographic puzzle, the greater the computing capacity or hash rate a miner has, the greater will be Your probability of solving the puzzle, the first miner to solve it places the next block in the chain and wins those newly mined coins. When we talk about proof of work, we mean that the one with the greatest computing capacity has the highest probability, that is, more mining machines working at the disposal of the support of this network.
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• Proof of Stake (PoS): It is a consensus protocol where the amount of participation is taken into account, for example, that amount of money that someone predisposes to spend in the investment of equipment here is invested, but in the same currency it is invested in the currency to have a greater probability of participation and greater probability of winning the block and of course obtaining the profits that are generated when a new block is stored.
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• Differences between PoW & PoS

Pow	PoS
The Proof of Work has very good security levels, since the network is made up of thousands of miners and the more miners work the more secure the network is.	The network security is better, in this network users are protected of certain known attacks, such as the 51% attack.
The rewards obtained in PoW are determined by the amount of computing power that each miner has, the more computing power you have, the more rewards you will earn.	Allows a better distribution of rewards among network members.
The system consumes a lot of electrical energy. This is due to the computational work required by PoW and as the difficulty of mining increases, the more energy it will consume.	It is an environmentally friendly protocol, since powerful computing machines are not used, the energy consumption of PoS is minimal.
Scalability can be affected by the difficulty of mining. This is a problem that we see today, which makes transfers have a high cost in commissions.	It has greater scalability. This is one of its main characteristics. This is because you do not need any time intensive computer work.

♦Advantages and disadvantages of PoW y PoS

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Each advice algorithm has its advantages and disadvantages. For example, we have PoW that has proven to work safely and efficiently. Although it generates damage to the environment due to high energy consumption.

The form of validation of transactions is a big difference, however, in PoW you need an investment of thousands of dollars in hardware and invest time in the optimization of the software in addition to the time that the teams must work to obtain the return on the investment and start making a profit. On the other hand, in PoS this investment is not necessary. Since no computer equipment is needed to execute this grant algorithm

The algorithm in which PoW is executed is like a competition where the one with the most power wins, in PoS it is not. The Proof of Work is favoring miners who inject more capital and time. In a PoS protocol it is different. The profits obtained are proportional to the amount of money invested and are linear profits.

Which is better for scaling capacity?

PoS has a higher scalability ability, this consensus algorithm can eliminate the inconvenience of using computing power and electrical power. If a user has a higher level in the network and validates a deceptive transaction, he will lose all his participation and the possibility of making validations in the future. It is also difficult for a user to buy more cryptocurrency to get more participation, since as a user purchases cryptocurrency, it will become more and more expensive. In general, PoS is a better solution to scalability problems, as we would have a more secure blockchain that reduces power consumption and lowers the time it takes to confirm transactions.

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♦Examples

10 cryptocurrencies currently using PoW:

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10 cryptocurrencies currently using PoS:

♦Conclusión

The algorithms to achieve consensus on the blockchain are vital to its operation. Many think that the biggest idea in Bitcoin was the use of PoW to give users the ability to agree on a set of facts.

Current consensus algorithms not only support digital money systems, these algorithms also support blockchains allowing developers to run programming code on distributed networks. Currently they are one of the main technologies implemented in blockchain and are a fundamental part of the life of the networks.