Steemit Crypto Academy Season 4 Beginners' Course Homework Post For Task 6 : Title: Different Types Of Consensus Mechanisms Submitted By @simeon00 Date: 06:09:21
>"Question 1: What is the difference between PoW and PoS?
Advantages and Disadvantages?
Which one is better in scaling capacity?
Examples?
First of all, we want to understand what Proof of Work(PoW) and Proof of Stake(PoS) imply, and at this point, let's begin with PoW.
Proof of Work as connected or linked with bitcoin is perhaps a protocol or concept created or devised to form electronic transactions that are secured from cyber attacks and devoid of a third party, and of course it's decentralized.
The image below depicts Bitcoin as an example of this concept
Image Source
Proof of Stake(PoS) which is a system that permits users or machines to function well in a distributed setting, decides on who verifies the next block, depending on the quantity or amount of coins the individual holds, rather than miners making use of computers to check transactions as they do in the case of the usual or regular Proof of Work, in fact the PoS concept is centralized, and the first Cryptocurrency to carry out a complete and thorough PoS consensus model is Peercoin.
The image below depicts peer coin Cryptocurrency
At this juncture, we shall be looking at the differences between PoW and PoS proper.
Answer 1
The differences between Proof of Work and Proof of Stake are as follows:
- In PoW, the likelihood of mining a block is decided by the amount of computer work that is done by a miner, while in PoS, the likelihood of verifying or checking a new block is decided by how huge the amount of a coin an individual possesses, and of course in this latter case, the quantity of coins a person has matters.
- In PoW, a reward is issued to the first miner to solve cryptographic or Proof of Work puzzle of each block, and what is this cryptographic puzzle all about?
Cryptographic puzzle is all about miners using their computing power to irregularly produce numbers at a quick pace, and if they produce the winning number, they win a lottery, whereas in PoS, the validator doesn't get a block reward rather he receives network fee as his reward, and in this case, a validator is someone that is charged with the task of checking or confirming blockchain transactions as to whether they're legal and accurate or not.
- In PoW, in other to link each block to chain, miners must struggle to solve hard puzzles with the use of their computer to manipulate or control data, whereas in
Proof of Stake, there is no struggle since block creator is selected by an algorithm that is founded on user token or reward.
- In Proof of Work(PoW), for hackers to be able to link or join fraudulent block, it's required that they have 51% of computation power, and this computation power refers to how fast a machine can perform an operation, whereas in Proof of Stake(PoS), it would require that hackers have 51% of all digital currency on network, which is virtually not possible.
- Proof of Work systems are energy inefficient and are cheap, whereas Proof of Stake concepts are much more expensive and energy efficient than PoW systems.
- PoW has equipment designed to make the best use of processing power, while in PoS, standard server grade unit would suffice.
- In PoW, the first investment is to purchase hardware, whereas in PoS, the initial investment is to purchase token or coin and improve status.
- Bitcoin is the most popularly known digital currency that makes use of Proof-of-Work mechanism, or consensus building algorithm which uses the most popular Proof-of-Work function known as SHA256, while in PoS, some of the cryptocurrencies that make use of various types of Proof-of-stake consensus are: Tezos, Cardano, Cosmos, etc.
Reference
Answer 2
In fact, one of the basic merits of the PoW is that this consensus mechanism offers block rewards and other benefits to it's miners, such benefits as a particular percentage of the mining costs or fees, for mining on this mechanism.
This protocol also produces a decentralized network which is the Paramount or chief basis of Cryptocurrency activities.
The Proof of Work(PoW) keeps the blockchain in a very complicated or difficult way while at the same time being extremely difficult and costly to attack.
The Proof of Work gives rise to high energy consumption thus greatly escalating the cost and the effect on the environment and this could comparably be laborious and difficult for the user.
The Proof of Work results in prolonged dependence on mining activities even while recently produced digital currencies continue to take part in the crypto market
The Proof of Stake doesn't need calculation power and they're more energy efficient.
In addition, the Proof of Stake gives fantastic benefits and rewards to miners who make use of their cryptocurrencies.
The Proof of Stake equally can be said to be without risk when it comes to provision of security for miners in the future to enable them receive compensation in the event of any fraudulent activities on the internet, such as cyber attacks or cyber crime.
Proof of Stake raise the foundation for a decentralized network, trying to badly damage the main foundation for the crypto currency system.
The PoS is centralized and less secure, hence could be vulnerable to low quality attacks thereby bringing damage to user investments.
Answer 3
From my research findings, I would conclude that the proof of Stake is better in scaling capacity than the PoW, given the fact that the Proof of Work (PoW) limits scaling capacity.
Answer 4
The following are two examples of PoS, and they are Ethereum and NXT coin. Let's consider them one after the other.
Granted, while it was more difficult to understand the Proof of Stake than PoW in terms of getting to a consensus along the network, however, Ethereum can be said to be one of the major cryptocurrencies that is solidly founded on the Proof of Stake concept, for that affort has always been directed towards the development of Ethereum especially since the inception of their phase 2 upgrade. For example, Ethereum users are required to invest 32 Eths to be able to validate transactions, since they are irregularly selected, and also verify and manage blocks that are under their care.
This is another powerful example of the Proof of Stake(PoS) system. Their blocks are produced every 1 minute on average by accounts that are opened by computers that support the network and reproduced by a forging process.
The following image is a depiction of this coin
Image source
Security is equally put into account in this system, for cyber attackers are hindered from producing new chains from the first block.
Reference
Cc:
@sapwood
@steemitblog