Crypto Academy Season 3 Beginners' course - Task 4: Different types of Consensus Mechanisms [POW & POS]-Homework

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

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(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?

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(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?

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

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One of the consensus techniques used in blockchain technology is Proof of Work (PoW). PoW miners on the blockchain network demonstrate their commitment to the network's development by verifying and finishing blocks by solving hard mathematical problems using their computing power. This also protects the network from being hacked. This is the current consensus process employed by BTC.

Consensus is established with Proof of Stake (PoS), on the other hand, by staking with the coins people currently own in the network rather than solving mathematical riddles using computer power. This was developed as a replacement for PoW and is the consensus method used by networks including STEEM, NEO, and NXT.

What Are the Differences Between PoW and PoS?
• During the mining process, PoW uses more computing power, but with PoS, the number of bitcoin held by users determines whether or not a new block is legitimate.

• There is competition in the PoW mining process because miners must solve complex puzzles in each block in order to compete with their computational power, whereas there is little or no competition in the PoS mining process because the block creator is chosen by an algorithm based on the user's stake.

• PoW gives miners an ultimatum to mine, but the PoS offered crypto miners the freedom to mine based on the amount owned.

• PoW is an investment in hardware. PoS, on the other hand, invests on acquiring stake and establishing a reputation.

The Benefits of PoW
• The major advantage of PoW over PoS is security, as it will be extremely difficult for hackers to gain control of the network.

• Because of the enhanced competition among miners in the network in order to solve mathematical puzzles for validation, PoW is more fair than PoS.

• PoW-based networks are also more decentralized.

The Negative Consequences of PoW
•The proof of work allows for excessive energy consumption, resulting in a significant increase in cost and an environmentally damaging impact on the user.

• Even though newly minted Crypto currencies continue to have a part of the crypto market, proof of work leads to a long-term dependency on mining operations.

• Finally, Proof of Work models necessitate the provision of significant and increasing computing power, which results in a high rate of waste everytime an equation is solved.

Benefits of PoS
• In comparison to PoS, it uses less energy, making it more energy efficient.

• The staking procedure is open to anyone with even a little network experience or skill.

• Users will simply need to improve their reputation to raise their staking power, which will help them boost their staking earnings.

PoS drawbacks
• They present the foundation for a decentralized network, attempting to mutilate the crypto currency system's basic foundation.

• Proof of stake has a lot of security flaws and might be vulnerable to low-quality attacks, resulting in user investments being harmed.

• Staking appears to be monopolized in PoS because those who can afford to acquire coins to stake have more reputation in the network than those who cannot.

Which one performs better in terms of capacity scaling? Examples?

The scalability of the proof of stake mechanism is stable. This is due to the fact that validators are mainly chosen at random for each round, and they only agree if the block will become a part of the chain.

In terms of scaling, proof of stake is preferable since hackers frequently encounter obstacles in their attacks. For example, a 51 percent assault only entitles the hacker to 51 percent of the crypocurrency, which is not advantageous to them.

Furthermore, the proof of stake method has been shown to be better for the environment than the proof of work approach, making it more scalable.

Bitcoin and Ethereum currencies that use PoW, whereas STEEM and NXT use PoS.