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

Hello steem world

This is my work for the 4th task of the introductory courses for steemit CryptoAcademy. Special thanks to professor @sapwood for the lesson with simple terms and excellent explanation. Below is my homework task.

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Homework task 1:
What is the difference between PoW & PoS? Advantages & Disadvantages? Which one is better in scaling Capacity? Examples?

• Proof of work (PoW): This is a consensus protocol where miners work to solve cryptographic puzzles with the use of their computers, the higher the computing capacity or hash rate of a miner, the greater the chances of a miner to solve the puzzle. With PoW, the first miner to solve the puzzle is been rewarded and is opportuned to place the next block in the blockchain. Miner's that uses PoW must input the use of computing efforts to solve a cryptographic puzzle, verify them and then validate the transactions on the blockchain.

• Proof of Stake (PoS): is a consensus mechanism where miners are able to validate trandaction in the network based on the amount of money they have and staked. Which is to say the higher your stake as a miner the higher and better your chances of participating in validating process and greater probability of being rewarded with a new block. PoS validating process is known as foraging.

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DIFFERENCE BETWEEN PoW & PoS

Pow	PoS
The probability of a miner to mine a block is based on their computing effort to solve cryptographic puzzle	The possibility of a miner to validate a new block is based on the amount of coins they have and stake in the network
PoW rewards the first miner with a new block.	Validators are rewarded with a network fee instead of blocks like in PoW.
Proof of work requires large amount of electrical energy consumption(an estimated amount of $151,000 electrical energy per day) which is expensive.	PoS uses less electrical energy consumption with low cost, unlike PoW.
Security level is high,and there is low chance for hackers to penetrate the system, as any hacker would need at least 51% of computing power to be able to add any malicious block to the blockchain.	For hackers to access this system, they would need to possess 51% of all cryptocurrency on network, which is practically impossible for a user to have.
PoW is not eco-friendly, due to the large emission of electrical energy into the environment which is bad for human health.	PoS is more environment friendly and uses less electrical energy
Requires the use of expensive hardwares and specialized equipment to enhance processing power.	Requires less expensive hardware, with a standard server is more than enough for operations.
With PoW, there is initial investment to buy hardwares	With PoS, the Initial investment is the purchase of stake and to build your reputation.
Bitcoin is the popular cryptocurrency of PoW, that uses PoW function SHA256.	Cryptocurrencies like EOS, Tezos, Cardano and Cosmos uses PoS.

Advantages and disadvantages of PoW and PoS

ADVANTAGES OF PoW

•More decentralized
PoW is truly a decentralized system, as it give opportunities to series of miners to work for their stability in the blockchain.

•Security
PoW system is well secured, as the more miners in the network, the more transactions is very secure, thus making PoW a more efficient and safe system.

•Reward system
Miners are rewarded with a new block and gets a share from the transaction fee in the network.

DISADVANTAGES OF PoW

•High energy consumption
PoW consumes a lot of electrical energy, which affects environment and humans at large.

•More investment in equipment and Time
PoW requires large investment of expensive hardwares for operations. And miners needs to invest more of their time in computing process in the network.

•Prone to alteration of blockchain
Although, the security level is good but hackers who have 51% of computation power will have access to add malicious blocks to the blockchain.

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ADVANTAGES OF PoS

•Energy consumption
PoS requires less energy consumption as such is more energy efficient.

•Mining power
Miners have more mining power, based on the amount of coin they possess or retain in the network.

•Security
The proof of stake system is more safe and secure, than the PoW.

DISADVANTAGES OF PoS

•Reward system
Miners are rewarded randomly,based on the amount of coins they stake. This makes PoS a less decentralized system.

•validation process
For a miner to participate in validation process, you need to invest more(stake) and possess large amount of coin in the network.

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Which one is better in scaling capacity?

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The Proof of stake consensus has a more better scalability capacity than proof of work, this is because hackers cannot penetrate a PoS protocol unless they can have 51% of the crypocurrency in the blockchain, which is quite expensive to have and is not beneficial to them.

Proof of stake system is stable and consistent in terms of scalability, because validators in the system are mostly selected randomly, where they reach a consensus to whether to validate a new block and add it to the blockchain or not.

With PoS security is more guaranteed and transactions process is fast and efficient. PoS allows thousands of transactions per second to be carried out. Unlike the Bitcoin PoW that permits an average of 4-10 transactions per second.

In a nutshell, the proof of stake consensus is less expensive, requires less energy consumption and is eco-friendly, compared to the proof of work system.

EXAMPLES

▪︎PoW
Examples of PoW cryptocurrencies includes; Bitcoin, ZClassic, Conflux Network, Hush, HUSD, Litecoin.

▪︎PoS
Examples of cryptocurrencies using PoS are; Algorand, Oxen, Vega Protocol, Tezos, Rubycoin.

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CONCLUSION

The proof of work and proof of stake consensus mechanism are of great essence in cryptocurrency blockchain technology. The PoS is more scalable as it as provided more solutions to the scalability issue of Bitcoin proof of work. PoS is simple to use, environment friendly and transactions process are fast compared to PoW. Although, PoW rewards it's miners based on their computing effort in solving puzzles in the network.

THANK YOU FOR READING THROUGH

Cc: @sapwood