PoW & PoS Consensus Mechanisms - Steemit Crypto Academy Season 5 - Homework Post for Task 6 [By @stan015]
Greetings everyone!👋 In this article, I shall discus deeply on Pow and PoS Consensus Mechanisms. This is in regards to the homework post for task 6 by professor @sapwood.
This article shall focus on answering the below questions and also explaining more about PoW and PoS;
What is the difference between PoW & PoS? Advantages & Disadvantages? Which one is better in scaling Capacity? Examples?
What is Consensus Mechanism?
Assuming in a cycle of five friends, if all the five friends agrees on a single topic, then we can say that consensus is archieved. But in a case where all five did not agree on a single topic, we can then say that the topic with the highest percentage (lets say 51% and above) would be satisfied.
In cryptocurrency, consensus mechanism, which is also known as consensus protocol or consensus algorithm is a fault-tolerant mechanism that is used in blockchain to settle on an agreement on the truthfulness or state of a single network among distributed nodes. This mechanism allows new block to be added to a blockchain with respect to the truthfulness and security of the block.
What is PoW?
PoW, which is an accronym of Proof-of-Work, is a type of consensus mechanism that is widely used in cryptocurrency mining for validating transactions and mining new tokens/blocks by solving complex mathematical puzzles.
What is PoS?
This is a type of consensus mechanism that requires the members involved to stake their coins in order to have the right to check new blocks of transaction and add them to the blockchain. Proof-of-Stake works with respect to the proportion of the quantity of holdings of the members involved. A member with higher proportion of holdings will have a higher chance of being selected as a validator.
The major difference between PoW and PoS is that Proof-of-Work uses a competitive method that requires miners to solve mathematical puzzle in order to be able to add new blocks of transactions to the blockchain, while in Proof-of-Stake, miners are selected randomly to validate new block transactions based on the proportion of the quantity of their holding/stake.
PoS is less energy-intensive compared to PoW.
| ADVANTAGES | DISAVANTAGES |
|---|---|
| high security | high energy consumption |
| cryto rewards can be earn by miners | It is expensive to operatein terms of equiptments |
| It is a better decentralized way of verifying transactions | It has slow transaction speed which makes it inefficient |
| trust and legitimacy is guaranteed | expensive transaction fee |
| ADVANTAGES | DISAVANTAGES |
|---|---|
| Low energy consumption | It lacks proof of sustainability |
| It provides fast transactoin | security is not as strong as that of PoW |
| It provides inexpensive transaction fee | It requires more funding in order to stand a high chance of being selected as a validator |
| It does not require special equipments | low reward from mining |
Many cryptocurrency are being migrated to PoS because PoS is better perceived in terms of scalability compared to PoW. PoS solved the two main problems of scalability, which are energy consumption and transaction speed. PoS consumes low energy and it is fast in transaction. Other considerations includes lesser fees of transaction and inexpensive equipments needed for PoS.
| PoW | PoS |
|---|---|
| Bitcoin | BNB |
| Etherium | Cardano (ADA) |
| Litecoin | Polkadot (DOT) |
| Dogecoin | Solana |
Many thanks to professor @sapwood for the wonderful lecture. Understanding the consensus mechanism is so important in the crypto world and I am happy to have acquired new knewlege from the lectured, making researches in order to complete this wonderful task was indeed helpful and I hope my readers understands PoW and PoS, these two are the most popular of all the types of consensus mechanisms, others include Delegated Proof of Stake(DPOS), Practical Byzantine Fault Tolerance (PBFT) and Directed Acyclic Graph (DAG).
https://steemit.com/hive-172186/@stan015/my-introductory-post-to-this-great-community