Crypto Academy Season 3 Beginners' course - Task 4: Different types of Consensus Mechanisms||Homework Task by @mayureshpandit
Namaste friends,
Welcome to my homework post for professor @sapwood on task-4.
Special Thanks to professor @sapwood for providing us great resources of learning for free and give us chance to write a homework post and earn some tokens.
Homework Question
- What is the difference between PoW & PoS? Advantages & Disadvantages? Which one is better in scaling Capacity? Examples?
Firstly understand what is PoW and Pos after that we will see the difference between those terms.
PoW (Proof-of-Work)
PoS (Proof-of-Stake)
Let's see the major difference between PoW and Pos in the below table.
| PoW(Proof-of-Work) | PoS(Proof-of-Stake) |
|---|---|
| PoW requires a high amount of energy and power | PoS is energy-efficient it does not require a high amount of electricity. |
| PoW was not environment friendly as In the mining process we need to use lots of supercomputers to solve the equations. | PoS is environment-friendly as compare to PoW as it doesn't require expensive supercomputers and in result, it requires less energy |
| To add each block to the chain, miners must compete with other miners to solve complex mathematical puzzles using their computer processing power. | There is no competition between miners as the block creator is chosen by an algorithm based on how many coins have miners. |
| In PoW hackers will need to have 51% of computation power to add malicious blocks. It should be possible. | In PoS hackers will need to own 51% of all cryptocurrency on the network, which is quite impossible in the real world. |
Now we can see the advantages and disadvantages of PoW and Pos in the below table.
PoW(Proof-of-Work)
| Advantages | Disadvantages |
|---|---|
| 1. The best advantage of PoW is you don't need to hold coins in your wallet. You will enjoy the block rewards even you don't have the coins in your wallet. | 1. It has a very bad impact on the environment as it requires high computing power. |
| 2. It is in used for many years by ETH and Bitcoin. | 2. It needs a high processing power computer that was very expensive. |
| 3. It was easy to implement you just need to have good computers. |
PoS (Proof-of-Stake)
| Advantages | Disadvantages |
|---|---|
| 1. PoS requires less energy so it was environmentally friendly as compared to PoW. | 1. A certain amount of coin needs to lock in the wallet and miners will never allow selling those coins unless and until he is willing to stop the mining. |
| 2. It will increase the number of transactions on the network. As it requires less time per transaction. | 2. It's new in the industry and still, its security is not tasted that much as compared to PoW |
| 3. Transaction on PoS is much cheaper because it reduced gas costs. |
As we saw in the industry PoS is using by some cryptocurrencies. Some examples of PoS consensus mechanisms as given below.
- Cosmos (ATOM)
- ADA(Cordano)
- Lisk (LSK)
Also, we heard the news of ETH will adapt the PoS mechanisms as this mechanism has better scaler capacity and it will increase the no. of transactions up to 100,000 per second from 64 per second transactions and it will also be cheaper.
Conclusion
In this post, I tried to explain about PoW(Proof-of-Work) mechanism and the PoS(Proof-of-Stake) mechanism. Thanks to @sapwood for giving us valuable resources to learn.