If you’re a crypto newbie looking to get into cryptocurrency mining to fund your crypto wallet, learning the blockchain‘s consensus mechanisms i.e. how it validates transactions is a good start.
Every cryptocurrency has a core of computers that assist in safeguarding the software from attackers as well as control the circulation of new crypto assets in the supply. These operations are part of the “consensus mechanism”.
Currently, Proof of Work (PoW) and Proof of Stake (PoS) are the most popular methods used in consensus mechanisms. Each of them works differently and has unique trade-offs. With both of them gaining notoriety, crypto enthusiasts are now debating PoW vs PoS.
These two systems mainly function in regulating the transaction process, in which users’ transaction data is first verified before being added to the blockchain ledger to execute the transaction. Not long ago, miners started suggesting a switch from Proof of Work (PoW), to Proof of Stake (PoS).
Understanding the difference between the two systems can benefit your crypto activities, especially in deciding whether Proof of Stake (PoS) or Proof of Work (PoW) is a more suitable and lucrative verification method.
Hence, Zipmex is delivering a review of Proof of Stake (PoS) vs. Proof of Work (PoS), as well as an in-depth comparison in this article. Shall we?
What is Proof of Stake (PoS)?
Proof of Stake (PoS) is a mechanism used to authenticate mining transactions. With this method, users can mine and validate their own transactions based on the number of coins they hold. In this case, the amount of crypto assets each miner has is significantly related to his/her bargaining powers in mining cryptocurrencies.
In short: the more coins you have, the higher the chances for successful mining.
In the PoW vs PoS debate, many people consider Proof of Stake (PoS) a better alternative to Proof of Work (PoW). Proof of Stake, however, can provide a small window for crypto-asset miners to be able to attack or even manipulate asset networks.
What is Proof of Work (PoW)?
While Proof of Stake (PoS) relies on the number of crypto assets a miner has, Proof of Work (PoW) is based on the speed at which miners – or rather, their devices – can solve complex equations.
Proof of Work (PoW) is a system that mainly emphasizes cybersecurity of the network, especially against malicious and/or spam emails or Distributed Denial of Service (DDoS) attacks that consume energy resources on computer systems by sending multiple false requests.
To put it another way: Proof of Work (PoW) is a consensus mechanism that requires miners’ effort to prevent reckless or malicious use of computing power.
Difference between Proof of Stake and Proof of Work
Proof of Work (PoW) is described as a method of determining how the blockchain comes to a consensus. It serves to assure that each transaction is valid and identify any malicious activity or attempt, such as the issue of double-spending.
In essence, PoW’s cryptography uses complex mathematical equations that can be solved by sophisticated computers only. As soon as a mathematical equation is solved, the network knows that the transaction is valid.
As a result, plenty of blockchains has adopted the Proof of Work (PoW) mechanism, which was originally designed for Bitcoin. Proof of Work (PoW) is an excellent innovation, yet it still has faults. As well as being energy-intensive, it has a low transactional throughput.
As a result, a new popular consensus mechanism has been created: Proof of Stake (PoS). It was first created in 2012 by two developers named Scott Nadal and Sunny King.
Peercoin was the first blockchain project to use the Proof of Stake model. The new system’s early advantages include a more balanced mining process, more transaction scalability, and less reliance on electricity.
Many are making the transition from PoW to PoS as it serves the same function as PoW but does so more efficiently.
Proof of Stake (PoS) has now emerged as a viable option for several crypto projects, including Ethereum, the second-largest cryptocurrency in the world.
PoS vs PoW: Proof of Stake as an alternative to Proof of Work
The Proof of Stake (PoS) system was essentially designed to address the weaknesses in the Proof of Work (PoW) system.
In the PoW, each transaction must have a maximum size of one Megabyte (MB) in order to be validated among computers or nodes operated by crypto-asset miners on blockchain networks all over the globe.
Then, PoW miners must be able to solve a mathematics puzzle to verify transactions. That way, verifying transactions in PoW is difficult because it involves many computers, leading to high energy consumption.
Eventually, PoS serves as a solution for PoW’s flaws. It allows miners to mine crypto assets and verify transactions based on the ownership of crypto assets. Since energy consumption can be minimized, the costs that will be subsequently incurred will be less and more efficient.
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