Different types of Consensus Mechanisms - Steemit Crypto Academy Season 5 - Homework Post for Task 6.
Happy new year to all my fellow steeminans around the world, today is the first day of 2022 and I am so glad to be alive and be able to participate in the crypto academy season 5 introductory course task 6, professor sapwoods course on the different types of consensus mechanisms.
I will then proceed to answer the homework questions below.
What is the difference between PoW & PoS? Advantages & Disadvantages? Which one is better in scaling Capacity? Examples?
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First of all let's define the two words separately.
CONSENSUS
In my own words, I would define "consensus" as a state where general agreement exists between systems and networks working together.
MECHANISM
Mechanism can be defined as a collection of working, functional and moving parts that work together following particular procedures, processes and rules in order to achieve a set goal or purpose.
CONSENSUS MECHANISM
From the definition above one can map out the definition of consensus mechanism, we can say that it is a unique and secured system or mechanism , but yet it accepts nearly perfect conditions. What I mean is that the consensus mechanism is open to fault.
Computer systems, programs, applications and block chain platforms utilize this very important and essential tool in the everyday running of the blockchain system. It is like a parliament used to reach necessary transaction agreements.
For example it is used by cryptocurrency systems to reach a point or an agreement with the different sections on the price of data. An example of a platform that makes use of this system is the Bitcoin and ethereum cryptocurrency.
Another simple definition is that consensus mechanism is a collection of selected procedures or processes that is utilized by a particular system to reach necessary complicated points of agreement.
Around the world, blockchain cryptocurrency platforms operate with practically no license because it encompasses a large number of people around the world advocating and approving transactions per second.
With this large network of money moving around , there must be a safe and unique network of protective mechanisms against malicious transactions, to maintain the system in a stable state of fair, secure, efficient and effective. The main tool for this complicated job is known as the consensus mechanism.
Let's say it is a set of procedures and processes utilized to set up an agreement on the validation of other participants on the blockchain.
One of the most essential criteria every decentralized system aims to target or reach is a level of maximum security of transactions while still settling other Important user needs. And of course in every system both social and technology there must be an agreement or validation between all parties or bodies involved.
On the blockchain it employs, settles or reaches an agreement on the particular set of data to be processed or validated.
PROOF OF WORK(Pow)
The proof of work is a dynamic network of agreement where understanding is common among all parties involved in any decentralized or secure network, they have a common understanding about the particular data to be validated for processing.
This process is usually energy intensive, as it requires a lot of complicated mathematical calculations and that is where the main work lies. It gives users the responsibility to break down complicated puzzles, this process will then determine if their block will be added to the chain after validation. This is usually not an easy task to perform, but when done correctly users get compensated. Examples of crypto currency platforms that have embraced this system is
- Bitcoin
- Ethereum
PROOF OF STAKE(Pos)
This type of consensus mechanism is used by many crypto platforms in modern days because it is more innovative and less energy intensive. On this system, unlike the latter, it does not apply the use or calculation of complicated riddles and puzzles to validate transactions or rather does it need complicated processing skills to be applied. It is a system that adopts a lesser level of energy to operate but at the same time being efficient and effective.
From the name "Proof of stake", this consensus mechanism system is mainly concerned with the stake of its users, that is how much they invested into the project. This means that before a particular user is selected for validation, he/she must possess or own a certain percentage of the crypto asset in his wallet.
Here are some crypto projects that have embraced this consensus mechanism system:
- Solana
- Dash
The two consensus mechanisms mentioned above might always seem similar, but they both have a lot of differences, because they operate with different processes and procedures. One is just less complicated from the other. Let's differentiate the two in a tabular form below.
DIFFERENCES BETWEEN PROOF OF WORK AND PROOF OF STAKE
| Proof of work(Pow) | Proof of stake(Pos) |
|---|---|
| The proof of work consensus mechanism is more of a decentralized secured network | While The Proof of stake consensus mechanism is an incorporated system. |
| This system requires the use and application of mining, hence they need miners | While the proof of stake mechanism doesn't require any form of mining |
| The proof of work consensus mechanism is more of energy intensive, that is it needs more attention to calculations and complicated puzzles, it requires a lot of energy to process | The proof of stake consensus mechanism requires a lesser amount of energy to run and is less energy intensive. |
| Proof of work consensus mechanism is more capital intensive, that means it requires a lot more money to run smoothly | While proof of stake consensus mechanism is less capital intensive, as it requires lesser funds to operate |
| This mechanism requires miners to input data into the system | The proof of stake doesn't require miners to input data into the system |
| On proof of work, potential validators are required to break down complicated puzzles before they can get picked to become a validator | While The Proof of stake consensus mechanism doesn't require any puzzle solving |
| The proof of stake consensus mechanism is a more secured platform due to its decentralization | While the proof of stake is less secured. |
| Here miners have to be involved to add another block to the chain, and this unique process is also known as mining | While in proof of stake, there is no need for miners before a block is added to the chain and this process is simply known as minting |
| Compensated miners | Uncompensated validators |
ADVANTAGES & DISADVANTAGES OF PROOF OF WORK(Pow)
Let's start with the advantages:
One major advantage of the proof of work consensus mechanism is that it is a More secure system, it is not easily tempered with by users.
This system depends solely on miners inputting data into the system, which means it will be almost impossible for fraudulent users and hackers to bypass the system.
Although the system is complicated and it involves users having to scramble their brains solving number puzzles and riddles in order to become a validator, successful users always have a compensation for their struggles.
DISADVANTAGES
The proof of work consensus mechanism is more capital intensive, it requires a lot of funds to set up, as a lot of expensive computer systems and technology have to be acquired.
The proof of work consensus mechanism is more energy intensive, as it requires a lot of complicated mathematical calculations to make validations.
This is a much slower network compared to that of proof of stake, and this is because of the multiple mathematical calculations involved.
ADVANTAGES & DISADVANTAGES OF PROOF OF STAKE(Pos)
The main advantage of the proof of stake consensus mechanism over the proof of work consensus is that it never requires miners input of data and complicated calculations. It simply saves more energy.
The proof of stake consensus mechanism operates at a faster and swifter speed than that of proof of work. because of the lack of mathematical puzzles and riddles.
And it requires less capital to operate.
DISADVANTAGES
This platform is less secure than that of proof of work.
Validators are not duly paid or compensated for their work unlike the proof of work consensus mechanism.
All users should have the opportunity to possess a given amount of the asset in their wallet but sometimes this is not possible.
Which one is better in scaling Capacity? Examples
To me I would say that the proof of stake consensus mechanism has shown more potential and is a better solution for scaling Capacity. Yes, the proof of work consensus mechanism is more technologically advanced, because it involves the network of expensive and high tech computer devices which still requires assistance.
The potential validators need to pass through energy intensive calculations in order to get selected as validators, in the case of proof of stake consensus mechanism it is the total opposite As it more energy efficient and effective.
In conclusion financial innovation around the world keeps on setting benchmarks for innovation in any decentralized or secure network. The Pow and Pos consensus mechanisms can be innovated.
Lastly I want to say a big thank you to professor @sapwood for this great lecture and the homework, I enjoyed every single second doing it.