Cryptoacademy season 3 beginning course - Home work post for Task 4 (Different between POW and POS)

(1) What is the difference between PoW & PoS? Advantages & Disadvantages? Which one is better in scaling Capacity? Examples?

Let's start with the meaning of Proof of Work (POW) and Proof of Stake (POS).

What is POW
PoW can be a technique of checking transactions both current and previous. The work that goes into solving mathematical puzzle with compensation to those who solve it, the form of compensation is termed mining. In other words, PoW is often a blockchain method for checking transactions and obtaining fresh blocks. Miners compete with Proof of Work to complete a complicated mathematical puzzle to create this new block, which means that they will be ready to pick up some fresh Bitcoins for a prize.

What is Proof of Stake (PoS)
Instead of miners breaking cryptographic riddles with computer power to verify transactions like they do with traditional Proof-of-Work, Proof-of-Stake is a consensus mechanism that selects who validates the next block based on how many coins you own.

Different Between POW and POS

1. POW: The amount of computing work done by the miner determines the chance of mining a block.
   POS: How much of a stake a person has determines the likelihood of validating a new block (how many coins they possess).

2. POW: Each block's first miner receives a reward for solving the cryptographic riddle.
   POS: The validator does not receive a block reward; instead, they are paid a network fee

3. POW: To maximize processing power, specialized equipment is used.

POS: A standard server-grade device will suffice.

1. POWhardware purchase investment

POS Purchase of a stake to build reputation require an investment.

1. POW Miners must compete to solve complex riddles using their computer processing power to add each block to the chain.

POS: Because the block creator is determined by an algorithm based on user stake, there is no competition.

Advantages of POW

1. Each solution is simple to verify by the community. This makes it simple to verify the legitimacy of all transactions.
2. Based on the Hashcash PoW algorithm, no single miner will be able to dominate the bitcoin network.
3. Before proposing a new block, the miners must demonstrate that they have completed some work.
4. Because work is extremely difficult, PoW minimizes the risk of attack by 51 percent

Disadvantage of POW

1. High cost of mining machine. Only the rich people can afford it

2. Only if there is a vast network of miners competing for block rewards do Proof of Work blockchains provide appropriate security. If the network is tiny, the prospect of a hacker gaining a simple majority of the network's processing capacity and staging a 51 percent attack still exists.

Advantages of POS

1. The validator does not receive a block reward; instead, they are compensated with network fees.
   two. The size of a person's stake determines the likelihood of validating a new block.
2. Monopoly and Power Consumption are dealt with.
   Disadvantage POS
   Proof of stake gives room for Monopoly, because the higher your stake the greater your chance of getting a block to validate.

SCALING CAPACITY

PoS provides a number of answers to Bitcoin's scaling issues. A solution that seeks to establish a consensus before blocks are constructed tackles the major challenges of transaction speed and energy consumption. This allows hundreds of requests per second to be processed with latency increases of less than a millisecond. Because it does not indicate resources as simply as PoW does with its energy requirements, Proof of Stake appears to be more complicated. This makes some doubt its efficiency and long-term usefulness, but if you look into the systems and understand them, you'll notice that scalability is not possible with PoW, but is possible with PoS.