Hello everyone, i welcome you all to my blog once again. @sapwood i appreciate you alot sir for all your effort and for your lecture presented on Different types of Consensus mechanism
After reading the lecture and conducting my own research, am here to carry out the home work that followed after the lectures. I will be answering question 1.
Before o go on to say the difference between POW and POS, i would like to say a few things about blockchain consensus mechanism.
What is Blockchain Consensus Mechanism?
Cryptocurrencies are not like our traditional money that is controlled by the government or the banking system, therefore there is a need to ensure that cryptocurrencies transactions carried out are properly verified. The processes used in achieving validation on a blockchain is called consensus mechanism.
Blockchain Consensus mechanism can be said to be the numerous methods used in achieving an agreement and even secure the decentralized network. In general they are protocols that ensures transactions are valid.
Examples of such consensus mechanisms are proof of work, proof of stake, etc.
Pow means proof of work. The word proof means evidence while work means effort. Therefore, proof of work(Pow) is a process which requires nodes on blockchain network to present evidence of work done in other to achieve consensus mechanism.
Proof of work is the first blockchain mechanism existing. Proof work became popular by bitcoin, which was the first cryptocurrency.
Proof of work just as the name implies, effort is required to stop the use of computing power in a malicious manner like spam email. The scalabilty of proof of work requires a large amount of energy.
The consensus mechanism proof of work can be used on the blockchain network to prevent people from gaming the network through expanding the effort of solving mathematical puzzles. Proof of work also prevents the monopolization of computing power on the network.
Pos is the short form for proof of stake. Proof of stake is another blockchain consensus mechanism that is a rival or an alternative to proof of work.
Proof of stake is a blockchain consensus mechanism and it works by staking tokens or coins. This is done by users donating their token or coins to be used to validate transactions.
Proof of stake functions by using tokens or coins in the wallet. The more the token or coins users have in the wallet, the more the right given to mine coin. This mechanism works by picking randomly miners based on their wallet size.
Proof of stake came into existence in the year 2012 with the peercoin. Because of some of the shortcomings of proof of work.
| Proof of work | Proof of stake |
|---|---|
| Proof of work requires more energy for transaction validation | Proof of stake requires less energy and resources for transaction validation |
| Proof of work not only guarantees consensus but provides the security of the blockchain | For proof of stake, in terms of security has not been proven to be more secured than POW |
| Validation of transaction is based on users solving mathematical problems | transaction validation does not require any sort of mathematical problems been solved |
| Proof of work is less environmentally friendly | proof of stake is more environmentally friendly |
| Expensive equipments are required before validation takes place | No expensive equipment required for validation to take place |
| ADVANTAGES | DISADVANTAGES |
|---|---|
| It frustrates the attempt of spammers on the blockchain because it requires alot of power | leads to waste of energy because it requires high amount of energy |
| Serves as security on the blockchain | High cost of maintenances because it requires big computers |
| Competition exist mong miners therefore, it makes transactions more valid | It not environmentally friendly |
| The reward miners get is greater than what you see on POS | Requires big computers for validation |
| POW prevents cryptocurrencies from been double or makes it difficult to do | POW is not as fast as POS |
| ADVANTAGES | DISADVANTAGES |
|---|---|
| The rate at which transactions are processed is fast | POS blockchains are not easily accesible, therefore limit the number of users |
| Proof of stake saves energy | users who have very high amount of tokens on their wallets can have more influence over the validation of transaction which is not so good |
| Proof of stake is environmentally friendly | in terms of security, POS has not been proven to be more secured than proof of work |
| Does not require large computers for validation | the validation reward gotten by its users can not be compared to the case of mining because here reward is lesser |
| The requirement for transaction validation is not linked to users solving mathematical problems | tokens or coins staked in PoS can not used until a certain time |
Scaling means to have increased capacity of transaction in a short time(speed)
Proof of Stake is better at scaling than proof of work. Proof of Stake is better at scaling because of its fast transaction speed of 100,000 transaction per seconds while proof of work has its transaction speed lesser than that.
Examples of blockchains that uses proof of stake for consensus are cardano, Tezos, Algorand.
CARDANO
Cardano is a decentralized blockchain, that uses proof of stake to achieve its consensus. Cardano was founded by a man named Charles Hoskinson in the year 2015.
Cardano is fast, and it uses less energy for its transaction validation. Cardano has its token as ADA.
Examples of blockchain that uses Proof of work to arrive at Consensus are Bitcoin, Etherum, Bitcash, Litecoin.
ETHEREUM
Ethereum is also a decentralized blockchain but it uses proof of work unlike cardano which uses proof of stake. Ethereum has its token as ether. Ethereum works with peer to peer network eliminating third party.
Both proof of work and proof of stake are consensus mechanism for validating transactions on blockchain. As you can see from my work above they both have their distinctive advantages and disadvantages. But one thing i got to learn from this class is that proof of work was the first form of consensus mechanism while proof of stake came into existence because of some of the short comings of proof of work, which means that proof of stake is like a rival to proof of work.
Thank you for reading
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#club5050 all the way!!
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