Steemit Crypto Academy Season 5- Homework Post For Task 6. Title: [Different Types of Consensus Mechanisms]
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Hello to everyone, Today I will be providing answers to the season 5 homework post for the task (6). seat tight and follow gradually as I provide the answers to Question One
(1) What is the difference between PoW and PoS? Advantages & Disadvantages? Which one is better in scaling Capacity? Examples?
Before we move further, it will be a great idea if we first understand the meaning of the word Proof of Work which is in short called [PoW] and also Proof of Stake in short, known as PoS. Until we understood these terms we can not differentiate them. So now I will like to start with the first word which is Proof of Work [PoW]
What do you understand by the word Proof of Work [PoW]?
IT is a decentralized system that works as a connection In respect to Cryptocurrencies to be precise. it is seen as a guideline that is developed or brought into existence by Algorand and it essentially is to form protected electronic activities/transactions from internet vulnerability. it was made to secure the blockchain thereby providing a security puzzle for the miners in question in other to validate transactions and it immediately exits or logs out any other person who tries to manipulate the security puzzle.
And also the level of acceleration of the transactions on this system relies on the nature of the Block producing time of a certain network. the Proof of Work is widely used in cryptocurrency for mining especially new tokens and validating transactions.
What is proof of Stake[PoS]
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The [PoS] which is in full called Proof of Stake, is known as a system that authorizes its users/machines for proper functioning in the various circumstances in which it is set.
It also determines who verifies the next block, and this is based on the number of coins the user possesses, which is better than just miners using computers to examine transactions in the case of the typical[PoW].
Also for the records, the general idea of the [PoS] is a centralized based concept and it is recorded that the first digital currency to undergo an entire and absolute combination [PoS] consensus design is known as the Peer coin which was launched in August 2012 by Sunny King and Scott Nadal. they are both software developers.
For some of us who do not know how the Peercoin looks like, the image of the Peercoin is as seen below.
After all said and done about the Proof of Work [PoW] and the Proof of Stake [PoS], I believe we now know their system functions. So now let us take a view on their differences which distinguished the Proof of Work [PoS] from the Proof of Stake[PoS]
What is the difference between Proof of Work [PoW] and the Proof of Stake [PoS]?
I will be elaborating on the differences below.
Proof of Work [PoW]
1- In PoW the reward/prize is given to an individual, that is the first person to mine a puzzle regarding each block. it is done by a method call Cryptography puzzle which all miners use their respective calculating authority to continue in providing different digits that changes in the various interval. if the winning digit is produced then the miner in question has won. While in PoS the one who validates does not get a block reward but get a network prize as a reward. the duty of such an individual as a validator is to checkmate or to affirm transactions regarding blockchain if at all the transaction is valid and precisely fixed.
2- Here in PoW to mine a block is determined based on the number of work done of a computer that is controlled by the miner. Whereas in PoS checkmating and confirming a new block is determined by the great number of the coin a person is having. so if an individual possesses a lot of coins it is an added advantage.
3- Also in PoW in other for an individual to perform a fraudulent activity/transaction thereby trying to interconnect an illegal block, therefore that individual must possess a certain amount of computing power total number of 51% in which the operating device can efficiently perform accurately. While in PoS It will need that before an unauthorized operation can be carried out there is a need for the unauthorized user to possess the various cryptocurrency on the network which we all know is impossible.
4- Again in PoW, rewards are given to the mining individual to provide the solution to the puzzle given on each block. and this puzzle is answered by the use of computing power which produces various digits at limited intervals and if luckily an individual produces the winning number then it is said that such individual has won. but in PoS reward is given to the validator but he receives a network fee as his token since he does not get a blockchain reward. also, the validator is responsible for checkmating and affirming the transactions performed on the blockchain whether it is valid and precise.
5- It is difficult to connect the various block to chains using the computer to operate data because it involves tactical and hard puzzles. while in PoS it is easy and stress-free due selection of block creator is done algorithmically and it is located on the user reward.
6- The first investment to be bought in the PoW is the hardware. while in PoS the main investment is to buy tokens and develop status.
7- The energy usage in Proof of Work is less and low in price. while in PoS the energy is more efficient and high in price.
8- And lastly in PoW, It tools are designed to conduct ta better processing power, whereas in PoS, involves great
quality of connection power which is good enough.
What are the Advantages of PoW?
1- It provides maximum security due to the difficult security puzzle in PoW it will be very difficult for the security to be bypassed by an unauthorized user.
2- Due to its decentralized network system which is very important, it helps to verify transactions in the digital currency.
3- It gives rewards such as blockchain and other advantages to the miners, like giving out a certain rate of the mining fees.
What are the Disadvantages of PoW?
1- Lack of efficiency and low transaction acceleration in the PoS mechanism.
2- Due to its nature of operation the transaction fee is on the high side [Expensive].
3- Expensive tools/equipment are needed in the PoS mechanism.
What are the Advantages of PoS?
1- In the PoS mechanism, the blocks are not mined because they are being forged and so the number of energy usage during the process is reduced.
2- The facilitates coins price stability because choosing a validator is been done randomly hence it makes the network a more decentralized system and therefore mining pools are evicted, there won't be a need to mine blocks anymore since the production of new coins as tokens for validators is needless.
3- There is energy efficiency in the PoS mechanism when compared to the PoW mechanism
4- It provides a great deal of acceleration in terms of transaction speed and also the transaction fee is not expensive.
What are the Disadvantages of PoS?
1- The security in PoS is not strong and reliable compared to that of PoS hence it is centralized in nature thereby it could be hacked by unauthorized users which may lead to damages.
2- Validators that possess many holdings can gain much power and control over the verification of the transaction.
Which one is better in scaling Capacity?
To me I prefer the Proof of Stake mechanism to the Proof of Work, from all indications above the Proof of Work, stands a better place in scaling capacity, which is the ability of a blockchain to process many transactions in just a second compared to the Proof of Workwhich demerits scaling capacity.
Examples of PoS?
The examples of Proof of Stake are listed below.
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1- STEEM: Steem blockchain is much preferable and better than Ethereum and Bitcoin networks in terms of scalability it processes more transactions than Ethereum and Bitcoin.
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2- TRON: On the Steemit platform, the Tron network can process many transactions in just a second due to the integration of Tron in the Steemit blockchain network.
3-NXT COIN: The Nxt coin is also a proof of stake digital currency, its transactions are considered safe even after ten [10] block confirmation, it block size cap grants for transaction processing of up to 367,200 various transactions daily.
Safety, reliability, and concordance are the main purpose of developing the consensus mechanism which is been utilized by the digital currency blockchain today and also the DPOS has proven to stand a better chance to be the favorable consensus mechanism to put to use in the digital currency blockchain.
A job well-done to professor @sapwood for this insight. thank you, sir.