Hello Professors and members of the Steemit Crypto Academy. I shall use this time to attempt the task 6 of the fixed courses for beginners.
To the best of my knowledge, the question one of the Homework tasks is what I shall provide answers.
What is the difference between PoW & PoS? Advantages & Disadvantages? Which one is better in scaling Capacity? Examples?
DIFFERENCE BETWEEN PoW AND PoS
Before I state the differences between the two types of consensus mechanisms, let me briefly state their meanings.
PoW which is an acronym for Proof of Work is a type of consensus mechanism or method of reaching agreement among miners which involves finding solution to a difficult mathematical puzzle or cryptographic computation in order to mine a block in a cryptocurrency blockchain. In this kind of consensus mechanism, the miner of the block is the one who first solve the puzzle.
PoS which is an acronym for Proof of Stake is a consensus mechanism that involves miners staking their tokens in the blockchain to determine the next miner of a block. All things being equal, the miner who stakes the highest mines the next block in most cases.
Now let me state their differences.
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| Proof of Work | Proof of Stake |
|---|---|
| PoW is a consensus mechanism among miners that involves solving a complex cryptographic problem to mine a block. | PoS is a consensus mechanism among miners that involves staking their tokens to mine a block. |
| PoW was invented by the founder of Bitcoin, Satoshi Nakamoto. | PoS was invented by Sunny King and Scott Nadal. |
| It was the first consensus mechanism created to run the blockchain technology | It was created as an alternative to PoS for the better running of blockchain technology. |
| It takes nothing less than 10 minutes to validate a block using this mechanism. | It takes only about 5 second to validate a block using this mechanism. |
| Limited number of transactions (only 5) can be contained in a block for validation with this mechanism. | It can perform quite a number of transactions of up to 15 in a block at once. |
| It totally relies on electricity for operation. | It does not totally rely on electricity for operation. |
| Because of it reliance on electricity, it is usually very expensive to use. | lt does not fully rely on electricity, it is less costly. |
| Bitcoin is the first blockchain project built on it. | Peercoin is the first blockchain project built on it. |
| Aside Bitcoin, Bitcoin Cash, and Litecoin use PoW. | Aside Peercoin, Dash and the Neo protocols use PoS. |
ADVANTAGES OF POW
It is the most secure consensus mechanism.
The founder of Bitcoin made sure that the first method by which blockchain reach agreement is safe to use. Therefore a very strong security base was developed for its use.Among miners, it is one of the most valuable consensus processes. Because solving any cryptographic difficulty is difficult, any miner who succeeds in doing so is paid handsomely with BTC or any other coin used in the transaction, and given the present price of BTC, the miners are rewarded handsomely.
It favors miners and network nodes coming to an agreement. This is because all of the miners work in a line at the same time, with no distractions, otherwise they will be penalized if they are late.
DISADVANTAGES OF POW
PoW's scalability is slow. Transaction confirmation takes a long time. This 8s usually a minimum period 10 minutes
It can only handle a limited number of transactions at once.
The transaction confirmation and validation process is quite similar to that of a centralized system.
It is both costly and resource-intensive. PoW makes use of high-end computer hardware. This equipment consumes a lot of electricity when in use, making its use costly.
ADVANTAGES OF POS
A. It is not costly because it does not totally depend on electric power for operation.
B. The block validation process is of high speed as it takes only about 5 seconds to validate transactions.
C. Up to 15 transactions can be processed in a block at a time using PoS.
DISADVANTAGES OF POS
A. Miners who have high quantity of tokens available for staking gets the bid to stake almost all the time, leaving others stranded.
B. It has a weak security system when compared to PoW. It does have a reliable security network.
C. Technical changes can be made at any point in time by top stake holders which may affect the community members.
THE BETTER ONE IN SCALING CAPACITY
From all that have been said about the two consensus mechanism that have been discussed above, the Proof of Stake stands out. It has the better scaling capacity as it takes maximum of 10 seconds to validate a transaction. This is of top speed, before you knew you made a transaction, it has been confirmed by miners. This was why the Ethereum blockchain which was formally fully built on PoW had to change some of its code making its transactions faster than Bitcoin. This is because the Ethereum blockchain is at the verge of changing to PoS for better scalability. Because the Ethereum blockchain is not fully built on PoS, it takes about 16 seconds to validate transactions while those blockchains fully built on PoS takes a maximum of 10 seconds to get transactions validated.
The scalability of PoS is super fast compared to PoW because sometimes, it takes up to an hour for transactions to be confirmed. This is something I have experienced in my transfer and reception of Bitcoin. So in terms of scalability, PoW does match PoS.
Conclusion
Once again, I have come to the end of another task. I have learnt the much I could from the different consensus mechanisms. I am glad to have completed the task given. I look forward to corrections on areas I didn't do well for better performance.