Crypto Academy Season 3 Beginners' course - Homework Post for Task 4: consensus mechanism for professor [@sapwood]
(1) What is the difference between PoW & PoS? Advantages & Disadvantages? Which one is better in scaling Capacity? Examples?
The idea behind this Proof Of Stake(POS) is that a person/user has the ability to verify block transactions according to the amount of coins they have. This means that the number of coins a person can mine is determined by the number of coins he/she stakes.
The Proof Of Works(POW) concept involves miners solving cryptographic puzzles correctly in order to get the opportunity of getting rewarded by generating a block and adding it to the chain.
source
Difference between proof of stake and proof of work
| Proof of stake | Proof of work |
|---|---|
| 1) The verifiers get network fees as reward and do not receive block reward | The first miner to solve the cryptographic puzzle of a block is rewarded |
| 2) First investments are made in building their reputation by buying coins/stake | first investments are made to purchase hardware |
| 3) Thenumber of coins a person's holds is what determines the validator of a the new block | The block miner is determined by the computational work done by the miner |
| 4) The creator of the block is selected with a method of wagering their coins by locking them in a wallet | Miners compete to add block to chain by solving puzzles with the use of their computational power |
| 5)Does not consume much energy | requires lots of computational energy |
Advantages of Proof of stake
- The block validators get good rewards for wagering coins
- Does not consume much energy/ computational power
- It is reliable
Disadvantages of Proof of stake
It has a less secure network
It is a less decentralised network
Advantages of Proof of work
There is a high level of security, thereby making it trust worthy
The miners get block rewards
It has a more decentralised network
Disadvantages of Proof of work
There is a low performance in network
There is high consumption in power and computing resources
Miners can manipulate the block chain to their advantages when they hold 51% or more hashing power
Causes waste of resources and affects the environment due to high consumption of power and resources
Which one is better at scaling capacity?
I think the proof of stake has a better scaling capacity than the proof of work because some tokens that operate with the POS is faster in making transactions.
Example
Bitcoin: The Bitcoin using the POW to reach consensus hand has the capacity of performing 7 transactions per second
Cardano: Uses POS to reach consensus and has the capacity of up to 1000 transactions per second
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