It is understandable if newbies in the crypto sphere are struggling to spot the difference between Proof-of-Work and Proof-of-Stake (PoW and PoS). It’s imperative to note that both are consensus mechanisms among stakeholders employed by the blockchain system to validate blocks. In return, these stakeholders get new tokens as dividends for their work.
Therefore, the situation is simply a win-win for both stakeholders and the blockchain. Blockchain rewards stakeholders for protecting it, and Blockchain remains protected. Without a doubt, both PoW and PoS offer different solutions to the same problem. How?
PoW and PoW explained
Meanwhile, the PoW is the system employ to seek the approval of stakeholders to validate a block. Bitcoin is the first crypto to use the PoW, it’s called the Proof-of-Work due to the use of an enormous amount of electricity. Literally, people convert power to a new token in the PoW.
Also, it establishes a stern competition among miners, who struggle to be the first to solve mathematical calculations. Miners employ a syndicate of supercomputers to solve the mathematical calculation.
In this process, the first to solve the mathematical calculation qualifies to correct the blockchain with new transactions. In return, they get a pre-agreed volume of new tokens, and it offers robust protection for the Bitcoin blockchain.
Overtly, the PoW has demonstrated to be the best way to protect a decentralized ecosystem. The strength and security of a token build up the more miners engage in the system. Nevertheless, hackers are mostly restrain from hacking into this sector due to the stern process of the PoW.
One important detail one must bear in mind when it comes to PoW vs PoS is that both are aimed to create new tokens. The ideology of every blockchain system is to seek the approval of stakeholders to acknowledge the validity of a block. The agreement must be successful before other transactions must take place. Therefore, it’s safe to say that the PoS is a system to achieve the agreement.
The PoS system aims to proffer solutions to issues militating against the Pow. PoW offers a difference in consuming power due to the elimination of depending on power-consuming machines to edge others.
How PoS is different from PoW
Unlike PoW, PoS is an advanced version of reducing power consumption while creating/mining new tokens. While many miners are struggling to create more tokens using the PoW, PoS aims to simplify the process. It lessens the volume of computational tasks required to verify blocks and transactions that keep the blockchain.
Furthermore, it helps to devise a new way of verifying blocks by using the gadgets of token owners. Holders give up their tokens as a deposit to be qualified to verify blocks. Through the deposit, token holders automatically qualify as validators, then undergo a randomized process to verify the block. This comes as a direct substitution for the PoW that employs a contest means for miners to create new tokens.
However, before qualifying as a validator, token holders become prompted to deposit a certain amount of tokens. A notable example is a requirement of 32 ETH as a deposit before becoming a validator. Nevertheless, several validators can validate a single Block, a precise validation from these validators completes the process.
The PoS employs different measures to assign who will validate the subsequent block. The amount of the deposit helps validators to get the privilege of validating the subsequent block. The larger the deposit, the bigger the likelihood of selection. Another method is using how long the token deposited has remain idle. Also the older the token, the higher the chances of selection.
Nonetheless, the PoW uses different systems to validate blocks, at a time Ethereum uses Shards to process transactions. This system mandates a minimum of 128 validators to verify a shard block, and 70% of them must attest that the transaction is acceptable.
Tokens using PoW and PoS
Lastly, Solana, Cartesi, Tezo, Tezos, Cardona, Mina, Celo and Bitchoice are leading tokens using the PoS.