Hello fellows. How are you all?
This is @aizazghumman, here I am going to share my homework post on the topic "Difference Between Pow&Pos" given by respected professor @sapwood
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What is the difference between PoW & PoS?
In blockchain technology, PoS and PoW are the two ways to verify cryptocurrency transactions.
In PoW miners get the reward by solving a complex mathematical gaming puzzle to verify the transactions. Winners can be in numbers but it works like those who solve the first will get the ultimate reward. It requires a lot of effort to solve the puzzle and create a new block.
PoW is working on the decentralized system and the selection of miners is random through the algorithm. Although, establishing mining rigs and computing technology with high energy resources make it difficult to build such a mining system. In the case of PoS, miners only get the network fee as a reward. Proof of Stake miner needs to verify by determining stakes. In addition, the founder developer of Proof of Stake was Sunny King and Scott Nadal. Miners need to buy a stake for mining in PoS. In PoW miners need heavy investment to create a mining setup. The core purpose of this blockchain mechanism is to reduce the energy cost that is required to mine in Proof of Work.
PoW is more secure as its works on a decentralized system. Every transaction at the time of execution goes into the unconfirmed pool of transactions and miners verify them by solving complex mathematical puzzles. So, only the resource full minner with a supercomputing system and sufficient energy can do the job in the first place. On the other hand, the Pos is less secure due to the centralized system.
In Pow, sufficient energy is required for mining because heavy supercomputing with extra hardware tools and equipment are key aspects. Proof of Stake mechanism does not require any supercomputing high electric energy hardware and costly equipment. It can be performed with a normal computer even with less energy as compared to the PoW.
Proof of Stake mechanism has the capability to make transactions faster than Proof of Work. As PoW takes more time to verify the transaction.
Advantages & Disadvantages?
Advantages Pow
In the cryptocurrency, market Pow is considered to be more secure as it works on a decentralized system
- A hacker will require to maintain 50% of computation energy for adding malicious blocks in the blockchain algorithm. So, it is impossible to have the system practically.
Due to decentralized blockchain technology, Pow is more secure and reliable for cryptocurrency transactions. People tend to rely more on decentralized cryptocurrency because it keeps their privacy and private data
In PoW the reward for solving the complex puzzles is more than the Pos. So, it is beneficial for miners to get rewards for their hard work.
Disadvantages Pow
Although PoW has many advantages, but also lack in some point that is the following
In PoW a lot of energy is required for mining digital currency which makes it very costly. A miner needs to invest a heavy amount in computers hardware and other related technology for mining setup.
Also, there is a certain limit to create a new block in blockchain technology. In bitcoin, the block can be created every 10 minutes. Pow is less scalable if we compare it to the Pos.
Advantages Pos
Proof of Stake has a faster transaction turnover as compared to the PoW. Transactions can be executed fastly in Proof of Stake.
In PoS, mining digital currency is less energy efficient and does not require heavy costly computing equipment and energy resources.
It is very convenient for a user to access from any computer or smartphone with the help of the internet. So, this feature makes it very useful for the user.
Due to less energy consumption, Proof of Stake is not harmful to the environment and does not contain any harm to the atmosphere.
Disadvantages Pos
In PoS, there is always a percentage locked in the system which is not friendly for miners as they get low rewards in the Proof of stack.
Due to the centralized system, PoS is less secure as compared to the Proof of Work. People tend to rely more on decentralized systems in the crypto market. Because decentralized keep the user transaction secure and maintain privacy.
In Pos, rewards for miners are low if we compare them to the reward of proof of work. In order to get a reward in this system, a miner needs to acquire a stake.
Which one is better in scaling Capacity?
In the nutshell, PoS has the ultimate speed and efficiency in cryptocurrency transactions. Due to speed, several organizations are moving towards the Proof of Stake mechanism. Also, in Proof of Stake, there is no delegation system but in the case of DPoS, it can be delegation can be made.
Regard
@aizazghumman