Download as PDF, PPTX
Uploaded by101 Blockchains
PoW vs. PoS - Key Differences
The document compares Proof of Work (PoW) and Proof of Stake (PoS) consensus mechanisms, highlighting PoW's reliance on computational power and its high energy consumption versus PoS's staking requirement for transaction validation. While PoW offers robust security, it risks 51% attacks and is environmentally harmful, whereas PoS is more efficient and scalable but may promote unfairness favoring wealthier validators. Both systems have distinct incentive policies and vulnerabilities affecting their functionality in decentralized networks.
More Related Content
Similar to PoW vs. PoS - Key Differences
PoW vs. PoS - Key Differences
- 1. POW VS POS 101blockchains.com KEYDIFFERENCES
- 2. What is Proof ofWork? Proof of Work is a type of consensus mechanism. Here, users (a.k.a. miners) use their computational devices to solve complex mathematical problems in order to verify and add blocks to the ledger system. It needs heavy computational power to function properly.
- 3. Miners solve complexmathematical problems. After that new block gets created and the transaction is confirmed. Depends on the number of users available on the network, overall load of the network and minimum current power. Each block will contain a new hash function and the hash function of the previous block. Working Principles of Proof of Work
- 4. Proof of Workconsensus offers a high level of security compared to other consensus mechanisms. It can establish a true decentralized network and offers a transparent transaction verifying process for every user. This process also offers a reward system for the users participating in the mining process. Advantages of Proof of Work
- 5. It does notoffer efficiency. The process is slow and can amount to high expensive fees. It needs a massive amount of energy to function, which is not an environmentally friendly process. The mining process damages hardware; therefore, miners have to invest in expensive equipment. It’s vulnerable to 51% attack. Issues with Proof of Work Consensus Algorithm
- 6. What Is Proof ofStake? Proof of Stake is a consensus mechanism that addresses the issues of Proof of Work and offers a better solution. Here, users will need to stake their coins in order to participate in the verification process. This one does not need computational resources like PoW.
- 7. In Proof ofStake, users have to be qualified to take participate in the verification process. To qualify one needs to store a certain amount of coin in their wallets. Once you are qualified, you will need to deposit or stake an amount of coin to take part in the voting system. This voting system will choose the validators. The more you stake the more you can mine or validate a new block. How Does It Work?
- 8. Proof of Stakeis a highly efficient consensus protocol as it does not need heavy computational power to function. It can offer inexpensive transaction processing fees and can also verify and process a transaction faster. It does not need any special hardware or equipment to function. Advantages of Proof of Stake
- 9. The process isnot as robust or secured compared to Proof of Work. It can promote unfairness as validators with larger coins at stake can influence the transaction verifications. In some cases, users may have to lock up their staked coins for an amount of time. Issues with Proof of Stake Consensus Algorithm
- 10. PoW Verification Mechanism Incentive Policy Vulnerability Motivation Requirement Mining Transactionfees + new coins 51% attack Profit Hash Power/Computational Power Validators Transaction fees Nothing at stake Loyalty Number of coins owned Key Differences between PoW and PoS Scalability Main Issues Low Energy Inefficient High Wealth concentration PoS
- 11. Verification Mechanism In PoW, theverification process is called mining. Here, miners have to verify the block by solving complex mathematical problems. In PoS, validators have to stake their coins in order to take part in the verification process. The more users stake, the more they can verify.
- 12. Incentive Policy In PoW, theusers will need to pay a transaction fee to the miners as an incentive in order to get their transactions verified. However, this mechanism also rewards miners with new native coins. In PoS, the users will need to pay a small transaction fee to the validators for validating their blocks. Here, the validators will only get the network fee or transaction fee as an incentive.
- 13. Vulnerability In PoW, thenetwork is vulnerable to 51% attack. Therefore, if an entity or organization owns 51% of the computational power available on the network, they can manipulate the network as they want. In PoS, if no users are staking their coins in the network, no transactions will get validated. So, the transaction processing will stop indefinitely.
- 14. Motivation PoW motivated usersto become miners by offering them profits. Without the extra reward points, no one would take part in the validation process. PoS does not offer users anything extra like PoW to motivate them in becoming validators. The system runs on the factor of loyalty. PoS requires users to be loyal to the network and take part according to their own accord.
- 15. Requirement PoW requiresa lot of computational power or hash power to function. However, this process is extremely costly and is affecting the environment negatively. PoS requires users to own a certain number of coins in order to be eligible. The more coins users own the better their chances.
- 16. Scalability PoW canbecome extremely slow when there are many users on the network. Therefore, it has a low scalability problem. PoS is a much faster process even if there are many users on the network. It can offer high scalability.
- 17. Main Issues PoWcan’t use energy efficiently. It needs a massive amount of energy to function, which is not an environmentally friendly process. PoS can become unfair if a few users have a high wealth concentration than others. Using that, those uses can dominate the verification process.
- 18. Learn More AboutPoW and PoS Blockchain Like a Boss Masterclass https://academy.101blockchains.com/c ourses/blockchain-masterclass Getting Started with Bitcoin Technology https://academy.101blockchains.com/courses/g etting-started-with-bitcoin-technology
- 19. 101 Blockchains Certifications CertifiedEnterprise Blockchain Professional Certified Enterprise Blockchain Architect Certified Blockchain Security Expert https://academy.101blockchains.com/cour ses/certified-enterprise-blockchain- architect https://academy.101blockchains.com/cours es/certified-blockchain-security-expert https://academy.101blockchains.com/ courses/blockchain-expert- certification
- 20. Why You MustGo With 101 Blockchains Certification Courses? High-Quality Research Information First-class Training Content Interactive Exercises Flexible Learning Using Modular Approach Access to Bonus Training Materials Various Training Strategies for Faster Learning Tangible Proof of Course Completion Weekly Hands-on Assignments Professional Instructors Premium Support
- 21. Free Resources Enterprise BlockchainsFundamentals - Free Course Blockchain Webinars Blockchain Conferences Access Free Resources Now! Blockchain Glossary Blockchain Flash Cards Blockchain Presentations Blockchain Infographics
- 22. Trusted By 30,000+Professionals! Read real stories on Trustpilot and G2Crowd. 500+ reviews
- 23. Thank You © 2021101 Blockchains. All rights reserved. This document may not be distributed, transmitted or reproduced in any form or by any means without 101 Blockchains’ prior written permission. While the information contained in this document has been obtained from sources believed to be reliable, 101 Blockchains disclaims all warranties as to the completeness or accuracy. Although 101 Blockchains research may address business, financial, investment and legal issues, 101 Blockchains does not provide any business, financial, legal or investment advice and this document should not be construed or used as such. 101 Blockchains shall not be responsible for any loss sustained by any person who relies on this publication.