Proof of Work (PoW) VS Proof of Stake (PoS)

What is Proof of Work (PoW) ?

The term “proof of work” was coined by Markus Jakobsson and Ari Juels in 1999. It's relevant to bitcoin. Proof of work is a protocol which is designed for secure digital transactions without any interference of 3rd parties. This work is based on previous puzzle solutions. Proof of work may be a method of  authenticating the current and past transitions. Basically this work is used in solving the puzzle generating rewards for whoever solves it called mining. Simply this is an algorithm that is designed to authenticate transactions and obtain new blocks added into blockchain. In Proof of work, miners are competing or fighting to solve a mathematical puzzle which will generate the new block then get the rewards as a bitcoins.

Benefits of Proof of Work

• Proof of work reduces the risk of 51% attack because it is very difficult to do work.

• The whole bitcoin network cannot be controlled by single handedly based on the Hashcash Proof of work system.

• The miner needs to provide the proof that they have done some work before suggesting a new block.

• Each solution is easy to verify for the community at the same time. This makes it convenient to check all transactions for trustworthiness.

• Proof of work also sets a specific limit on how many new blocks of data can be produced. E.g, miners can only create Bitcoin blocks every 10 minutes.

• It doesn’t depend on a single third party transactor. This is based on a truthless and transparent network.

• Monopoly can increase time by time.

What is Proof of Stake (PoS) ?

Proof of stake is based on consensus alogo that decides on who validates or authenticates the next block and according to how many coins you hold. Instead of miners cracking cryptographic puzzles using computerized power to verify transactions like they do with traditional proof of work.

• The possibility of validating a new block is determined by how large a stake of a person.

• The validators are not receiving a block reward. Instead they get network fee as their reward.  

• The peercoin was the first cryptocurrency that implemented the full scale Proof of stake consensus model.

• Proof of stake helps in monopoly control and power consumption.

 

Proof of Work (PoW) VS Proof of Stake (PoS) 

 

Proof of Work (PoW)	Proof of Stake (PoS)
The Possibility of mining a block is determined by how much computerized work is done by miners.	The possibility of validating a new block is determined by how much stake a person holds (how many coins they have)
A reward is given to the first miner to resolve the cryptographic puzzle of each block.	The validators are not receiving the block rewards rather they collect  network fee as their reward.
It's necessary for miners to resolve the puzzles using their computerized power so they add each block to the chain.	There is no competitiveness as the block producer is selected by an algorithm based on user stakes or coins.
Hackers needed to have 51% of computerized power to add malicious blocks.	Hackers needed to own 51% of all cryptocurrency on the network which is almost impossible.
Proof of work (Pow) systems are less energy effective and less costly but more proven.	Proof of stake (PoS) Systems are more costly and energy efficient than (PoW) systems but less proven.
Best tools used to optimize processing power.	Standard server grade units are more than sufficient.
First investment to buy hardware.	First investment to build reputation and stake.
Bitcoin is a well known crypto with proof of work consensus building algo which uses most well known proof of work.	Some cryptocurrency that use different versions of proof of stake consensus are: EOS, Tezos, Cardano and Lisk.

 

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