Crypto Academy Season 3 Beginners' course - Homework Post for Task 4: consensus mechanism for professor [@sapwood] by @obikay
(1) What is the difference between PoW & PoS? Advantages & Disadvantages? Which one is better in scaling Capacity? Examples?
Difference between Proof of Work & Proof of Stake
| PoW | PoS |
|---|---|
| How much computational work done by miner determines mining of a block | validating a new block here is set by how big of a stake someone holds |
| The first miner receives a reward for solving cryptographic puzzle of each block | the validator does not get any reward rather they take network fee. |
| The miners must compete to add a block to the chain with the use of their computer process power | the block creator is been selected by an algorithm based on user's stake |
| PoW systems are less not costly, more proven and less energy efficient | PoS systems are less proven, costly, and energy efficient |
| Specialized equipment to optimize the processing power | the Standard server grade unit is much |
| Initial investment to purchase hardware | investment to purchase stake and also build reputation. |
Advantage of Proof of Work
- Proof of work version makes the blockchain networks to be tough and expensive to attack.
- PoW reward miners with block reward and also a part of transaction fees.
- PoW sometimes result in extra decentralized networks.
Disadvantages Proof of Work
- PoW models needs permission to significant (and increasing) computational power, each time an equation is solved, alot of it is wasted.
- PoW request a bit more energy usage, which results to high costs and environmental effect.
Advantages Proof of Stake
- PoS models do not need the computational power in relation with proof of work and are much energy efficient.
- PoS models gives a better rewards for nodes staking with their cryptocurrency.
Disadvantages of proof of Stake
- Proof of stake models in general result in not much decentralized network.
- Proof of stake models are sometimes less secure which might give way to suspicious less cost attacks
Which one is better in scaling Capacity? And Examples
PoS provide some solutions facing Bitcoin scalability issues. The problem with the speed transaction and that of energy usage are addressed by a system that focus to attain a consensus before creation of blocks.
PoS puts an impression of becoming more complex here given that it do not imply resources as plainly as PoW does with its energy needs.
By understanding both proof of work and proof of stake, it's clear that scalability is not attainable with PoW meanwhile it is with PoS.
Examples are : ETHEREUM, TEZOS, DASH, NEO.
Cc:
@sapwood