The Emergence Of Proof Of Stake - All You Need To Know

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Hello Crypto friends,

Today is another beautiful day and we shall be discussing on another mind blowing Crypto topic.

Before Introducing the topic, I'll love to extend my warm regards to the moderators and admins of this community.

Today, we shall be discussing on proof-of stake consensus mechanism.

The emergence of financial crisis in 2008 led to the creation of bitcoin, and the success of bitcoin led to the creation of other cryptocurrencies.

As the world advances technologically, its growth also has effect on the financial world and this has led to the development of the blockchain that helps to validate transactions.

With it's non acceptance of a third party, the blockchain has devised several means which it uses to validate a transaction, and one of them is the proof of stake consensus mechanism.

PROOF OF STAKE

Proof of stake can be explained to be a cryptocurrency consensus mechanism that is used for the creation of new blocks and verification of Transactions in a blockchain.

A consensus mechanism can be explained to be a method in which entries sent into a distributed database are validated and made secure.

With the case of cryptocurrency, the blockchain is the distributed database and the blockchain is made secured by the consensus mechanism.

The proof of stake mechanism helps to reduce the computational work needed to ensure absolutely security of the blockchain and cryptocurrency.

Proof of stake uses a different means to validate blocks using the machine of coin owners.

The coin owners are required to offer their coin inorder to be given a chance to validate a block.

The proof of stake mechanism was introduced in the year 2011 and it was intended to serve as an improvement to the proof of work consensus mechanism, which is time and resource consuming.

In the proof of stake mechanism, the coin owners who staked their coin are referred to as a validators and they are selected randomly to validate a block unlike the pow consensus mechanism that makes use of a competition based method.

To qualify to be a validator, a coin owner have to stake a particular amount of coin, the Ethereum network for example requires a total of 32Eth from a coin owner inorder for him to be a validator.

With the pos mechanism, more than one validator is used to verify a transaction, and when they all confirm the genuinity of the transaction, then the block is validated.

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As I earlier said, different methods are used by the pos mechanism to validate a block.

Whenever Ethereum transit to pos, it makes use of shards to submit transactions.
The Transaction will be validated by a validator, and then added to the shard block which will require 128 validators more to verify the same transaction.

Once the shard has been validated and the blocks has been created, 2/3 of the total validator needs to confirm the genuinity of the block before it can be sealed.

There are different blockchain that is been secured with the pos mechanism and they are:

• Solana blockchain
• Cardano
• Avalanche
• Polkadot
• Binance Smart Chain

ADVANTAGES OF POS MECHANISM

• DECENTRALIZATION:

One advantage of a pos mechanism is it's decentralized state, any user is free to participate as a validator, provided you own the required token.

And this token is very affordable to get which makes many individual compete for the role of a validator.

• SECURITY:

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Security is another feature of the pos mechanism as it requires the hacker to possess at least 51% of the total token which will imply loosing such a great amount.

• SCALABILITY:

The ability of the pos mechanism to perform multiple transactions at the same time is one attribute that makes it scalable.

It's scalability feature is one reason why it was developed as an alternative to pow consensus mechanism.

• ENERGY EFFICIENCY:

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Unlike the pow consensus mechanism, the pos mechanism doesn't require the use of a high energy machine to solve high energy consuming puzzle.

And as such, the pos mechanism can be said to be more environmentally friendly as it doesn't emit unwanted gases. to the atmosphere

• LOW TRANSACTION COST:

This is one reason pos is preferable to pow consensus mechanism.
Pos mechanism happens to be less expensive than pow mechanism.

DISADVANTAGES OF POS MECHANISM

• COMPLEXITY:

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Inorder to avoid other potential hazard from affecting the blockchain, problems like "nothing at stake" or "long range attacks", some other rules has been implemented.

Also, the method of choosing block validators add to the complexity of the system.

• SECURITY:

Although we discussed that the pos mechanism is actually secured because it requires the attacker to own at least 51% of the token.

Well in most cases, owning a 51% of the token can cost low if the attacker can convince others that his attack will be 90% successful, and as such, other coin owners might decide to sell their token at a cheap price.

• INITIAL DISTRIBUTION:

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From our course of study, we know that inorder to be a validator on pos mechanism, a user has to stake coins.

We also know that such coins are initially gotten from block validation, so in a sense, without staking of coins, no one will be a validator.
And coins cannot be distributed unless their are validators.

The only way this problem can be solved is if there is a pre-mining of coins and this coins are then shared among the addresses in the genesis block.

SIMILARITIES BETWEEN POS AND POW CONSENSUS MECHANISM

There are numerous similarities between pos and pow consensus mechanism and some of them are :

• Both proof of stake and proof of work mechanism are very useful for transaction validation.

• They are both decentralized and help to eliminate the interference of a third party in cryptocurrency transactions.

• They both strive to ensure that the blockchain under them are secured although through the use of different means.

• Another similarities between them is that they encourage the spirit of unity among users.

DIFFERENCES BETWEEN POS AND POW CONSENSUS MECHANISM

In as much as there are some similarities between pos and pow consensus mechanism, there also exist some differences between them, and they will be listed below.

POS MECHANISM	POW MECHANISM
Proof of stake is more environmentally friendly as it doesn't require use of high energy consuming machine for block validation	Proof of work is not environmentally friendly as it emits dangerous carbon gases during mining processes.
Proof of stake requires less expenses for it's operation as it doesn't require complex machines	Proof of work is very expensive as it requires the use of complex machines to solve complex mathematical puzzles.
Proof of stake allows more users to participate and compete for the role of a block validator, since it's requirement can be afforded by most individual	Proof of work mechanism only allows the rich who can afford complex machines that can be used to validate blocks.
Proof of stake mechanism performs multiple transactions at a very fast rate	Proof of work transaction rate is not as fast as proof of stake.
Proof of stake transaction has a very less transaction fee for it's operation	Proof of work works alongside a high transaction fee.
Proof of stake is less secured when compared to proof of work, since an attacker can easily convince other coin users to join him in his attack	proof of work is more secured than pos since it requires a complex machine for it's operation.

CONCLUSION

Proof of stake is a very important consensus mechanism that was developed with the intention for it to serve as an alternative to pow which was associated with a very high transaction cost and high energy consumption.

Although the pos has some unique characteristics, the pow still appears to be more secured, and this led to the creation of other consensus mechanism as Dpos, Pob etc.