Image Source

Hello everyone,
I'm very happy to participate in this introduction course. It's been mentored by our crypto-professor @sapwood and it centered on "CONSENSUS MECHANISM, TYPES AND FEATURES".

This post will be structured based on the homework tasks given as stated below:

• WHAT'S THE DIFFERENCE BETWEEN POW AND POS
• ADVANTAGES AND DISADVANTAGES OF BOTH
• WHICH OF THEM IS BEST IN SCALING CAPACITY

CONSENSUS MECHANISM

As a distributed ledger, Blockchain technology is highly decentralized and have a flat topology. In that flat topology, there are many nodes/units that linked together to form the network. Each of this nodes exercise absolute authority over it's activities without interference but still connected effectively with others for transaction and validation of blocks efficiently via reaching a consensus or agreement. A type of consensus reached depends mostly on the type of mechanism algorithm adopted by that network.

TYPES OF CONSENSUS MECHANISM

There are many consensus mechanism that have been adopted by many networks depending on the objectives that the network/project wants to achieve. These mechanisms have positive impact and limitations that needed to be improved. Examples includes:

• PROOF OF WORK (POW)
• PROOF OF STAKE (POS)
• DELEGATED PROOF OF STAKE (DPOS)
• PROOF OF BURN (POB)
• PROOF OF CAPACITY (POC)
• PROOF OF ACTIVITY (POA)
• PROOF OF HISTORY (POH)
• PROOF OF ELAPSED TIME (POeT) etc.

PROOF OF WORK (POW)

As the name implies, there's a "WORK" in the form of cryptographic puzzles to be solved before a block is verified and added to blockchain. The miners solves this cryptographic puzzles with high computational power and skills.

This work is very laborious and high energy consumptive. The huge energy needed to power this huge mining rig that consists of many improved computer gadgets can equivalent to the high energy consumption of the whole New Zealand and Australia etc.

Whenever a record of transaction is filled on blocks, it will be sent to unconfirmed pool while the miners are randomly selected to verify those blocks on the pool. Once, miner get the block verified, it with be added(i.e, broadcast) to the long chain of the Blockchain.

However, this mining process is very rewarding. As when a block is verified, the miner is rewarded with new coins of that network. With this funds/rewards, the miner will be maintain his rig and do other personal chores.

Examples of networks that adopt POW are Bitcoin and Litecoin. But the time to verify a block is huge and different among them. It takes 10 mins for a consensus to be reached and a block of bitcoin to be verified while it's lower to 2.5 mins in Litecoin. This affects the scaling capacity of this networks which is very slow and high energy inefficient.

PROOF OF STAKE (POS)

In POS, a block is validated, not mined. The selection of the validators are based on the staked-weight of those validators. Any validator with higher staked-weight will be selected for validation of the blocks.

The process of solving a cryptographic challenges with less computational power under POS is called block minting or validation.

It's rewarding systems pay higher than POW to those validators. There is little or no energy consumption as there's no mining rig. There's no transaction log to limit the confirmation of transaction in time meaning More scaling capacity.

POS offer the network that adopts it a useful platform for more projects to be launch on them. It's more of central autonomy. Examples of those network includes: Ethereum, Neo, Dash etc.

WHAT'S THE DIFFERENCE BETWEEN POW AND POS

PARAMETERS	POW	POS
NAME OF THE PERSON THAT VERIFIED A BLOCK	MINER	VALIDATOR
REASON FOR THE VERIFICATION	CRYPTOGRAPHIC PUZZLES SOLVED	NO PUZZLES TO SOLVED
METHOD OF SELECTION	RANDOMLY	HIGHER STAKED-WEIGHT
REWARDING SYSTEM	LOW	HIGHER
ENERGY CONSUMPTION	HUGE AND INEFFICIENT	HIGHLY EFFICIENT
MINING RIG	PRESENCE AND COSTLY	ABSENCE
SCALABILITY	LOW	HUGH
AUTONOMY	DECENTRALIZED	CENTRALIZED

ADVANTAGES AND DISADVANTAGES OF BOTH

Both POW and POS have Advantages and disadvantages. They are shown in the tables below.

ADVANTAGES AND DISADVANTAGES OF POW

ADVANTAGES	DISADVANTAGES
DECENTRALIZED AUTONOMY	SCALING CAPACITY IS VERY LOW
SELECTION OF MINERS IS RANDOMLY	HUGE ENERGY CONSUMPTION
IT IS COMMON AND POPULAR	HIGH PROCESSING TIME
THERE'S AN INCENTIVES FOR MINERS	BUYING AND MAINTENANCE OF THE MINING RIG IS VERY COSTLY

ADVANTAGES AND DISADVANTAGES OF POS

ADVANTAGES	DISADVANTAGES
INCREASED SCALABILITY	CENTRALIZED AUTONOMY
SELECTION OF VALIDATORS BASED ON STAKE WEIGHT	HIGH SECURITY RISKS
SMART CONTRACT ARE ENCOURAGED	WEALTHY USERS WITH HUGE STAKED-WEIGHT ARE FAVOURED.
MORE INCENTIVES FOR VALIDATORS	ABSENCE OF MINING RIG
LESS ENERGY CONSUMPTION	THE "NOTHING AT STAKE" PROBLEM ARE CREATED
MORE ENVIRONMENTAL FRIENDLY

WHICH OF THEM IS BEST IN SCALING CAPACITY

Scaling capacity have to do with the transaction speed within the network for the transaction/blocks to be verified/validated. In POW, the speed in the networks is averaged.

Bitcoin transaction's speed is 10 minutes
Litecoin transaction's speed is 2.5 minutes.

WHILE

In POS, the transaction speed is very high and within some seconds which is very encouraging than what is observed in the POW, where transactions log created via huge numbers of unverified blocks in unconfirmed pools and the slight delay in the selection process of the miners.

CONCLUSION

Each nodes have a copy of the blockchain(i.e, distributed ledger) and take comprehensive records of the transactions but to validate a block, a consensus/agreement will be reached with other nodes to achieve that.

POS is an alternative consensus mechanism algorithm for POW and very innovative as it provides a solution to huge energy consumption and high cost of mining process affecting the POW projects.