Crypto Academy Season 3 Beginners' Course - Task 4: Different Types of Consensus Mechanism | Homework Post for Professor @sapwood
(1) WHAT IS THE DIFFERENCE BETWEEN PoW and PoS? ADVANTAGES & DISADVANTAGES? WHICH ONE IS BETTER IN SCALING CAPACITY? EXAMPLES?
INTRODUCTION
Hello everyone,
It is good to engage again in cryptoacademy. I am happy that I am learning new things everyday. Again I have gone through the powerful and insightful presentation delivered by Prof. @sapwood on "Different Types of Consensus Mechanism" for beginners' class Season 3 task 4.
I want to sincerely appreciate Professor @sapwood for doing a great job. His presentation is always harmonious. Prof has asked us to choose one question out of the three he posted. I have chosen question 1 which is written boldly at the beginning of this post. Let's go to the main business😁
DIFFERENCE BETWEEN PoW and PoS?
PoW which means Proof of Work, and PoS which means Proof of Stake are both consensus mechanism that is used to establish validity and authenticity of blockchain. They are protocol designed to form digital transactions secure without having to believe a 3rd party. However, the way they establish valid blockchain is different. The difference in their operation process is highlighted below:
| S/N | PoW | PoS |
|---|---|---|
| Computing | PoW consensus protocol requires a lot of energy and it demands a lot of effort for computing to solve difficult math problem | PoS does not require energy for computing. |
| Efficiency | Because of huge energy and effort requires to solve mathematical problem, it is less efficient and time demanding | PoS is efficient and faster than PoW because it offers a linear scale relative to the percentage of blocks which a Miner could confirm because it is based on the cryptocurrency quota owned. |
| Investment | Because PoW is computing based, a miner has to invest in hardware to perform his duty | In PoS, a validator has to invest in Blockchain's native coin. |
| Critic | PoW is subjected to criticism because if bitcoin rewards drop then less people have incentives to mine thus the security of the system is reduced | PoS could be criticized that since it is free to stake, it could be used for other coins. |
| Reward | Block reward is given to the first miner that solves mathematical puzzle | In PoS, the block reward is not given, instead the validators collect network fee. |
ADVANTAGES OF PROOF OF WORK (PoW)
- Proof-of-work (PoW) is a lot safer for blockchains and creates a much more immutable blockchain.
- PoW consensus algorithm is highly effective when it comes to guarding the blockchain.
DISADVANTAGES OF PROOF OF WORK (PoW)
- PoW requires a lot of computing effort for miners to solve mathematical puzzles
- Because of the huge computing effort required in PoW, it consumes energy and it is time demanding.
ADVANTAGES OF PROOF OF STAKE (PoS)
- Because Proof of Work does not require a lot of computing to validate blockchain, therefore it does not consume huge amounts of electricity to secure the Blockchain.
- The staker can sell their collectral at any time wihout having to buy any hardware.
- Too many calculations are not required in POS. Therefore, it could be said that POS is environmentally friendly.
- It is difficult to attack PoS protocol. To hack PoS, a hacker will have to possess 51% of total cryptocurrency in circulation which is not possible.
- Proof-of-Stake compromises a level of decentralization for speed and energy efficiency.
DISADVANTAGES OF PROOF OF STAKE (PoS)
- In PoS, coin are kept. Keeping the coins in validator's possession indicates that he cannot trade with them, so that a part of such currency is no longer useful as a form of payment, by earning a higher premium depending on the amount kept.
- PoS may tend to centralization because It gives voting power to the people who own the most coins, therefore the wealthiest entities will have the most voting power, and this opposed the purpose and intention of cryptocurrency.
WHICH ONE IS BETTER IN SCALING CAPACITY? EXAMPLES
PoS is better in scaling Capacity because it permits processing of hundred of thousands of request per second with miliseconds increases in latency.
Example of Coins that use PoW
• Bitcoin
• Litecoin
• Dogecoin
Example of Coins that use PoS
• NXT
• Bitshares
• Polkadot
• EOSIO
• Cardano.
Example of coins that use both PoW and PoS
• Peercoin
• Decred
CONCLUSION
"Proof of Work actually manages to protect the network from bad actors although the cost of this consensus algorithm makes us think of the other possible ways to validate transactions and keep the network working correctly and smoothly." Source
For this reason, apart from PoS, many other protocols, like Delegated Proof-of-Stake(DPoS), Proof-of-Capacity (PoC) Proof-of-Burn (PoB) e.t.c. have been developed to improve the efficiency, scaling capacity and chance of mining.
Thank you for reading
Written by : @msquaretwins
Cc:- @sapwood
Hello @msquaretwins, I’m glad you participated in the 4th Task of the Beginner’s class at the Steemit Crypto Academy.
Unfortunately, i have noticed some plagiarised content in your work. You copied your conclusion from an external source without any reference.
Plagiarised content.
Original content Source
Plagiarism is a great offence in Crypto Academy and it won't be tolerated by anyone.
Cc: @endplagiarism
@sapwood.
@reminiscence01, and @sapwood. I am sorry, I wanted to source that.
I have adjusted it. It actually escaped my mind. Please temper justice with mercy.
@reminiscence and @sapwood, Yes, I put it in my conclusion. I actually wanted to source it, it just escaped my mind. Thank you for your understanding.