Proof of Work Vs. Proof of Stake

Cryptocurrencies are the order of the day. However, not everyone knows the operation of the algorithms known as Proof of work and Proof of stake used in this medium of exchange.

They both are a consensus mechanism or algorithm which is used to validate transactions in the blockchain and add them to the blockchain to produce new blocks or tokens.

Proof of work is an indispensable security element today. And it is not only in the face of possible attacks on a network but also in the face of possible fraud within a cryptocurrency system. The objective of PoW is to create a consensus among all the parties that make up the network.

Proof of Stake is also a widely used consensus protocol or algorithm in blockchain technology which operates the same way as Proof of Work but has different features, which we will talk about in a short while. The acronym for the Proof of Stake is PoS, with which it is commonly known.

Thanks to these algorithms, which were developed to prevent mass spam and double-spending. Because of the PoW and PoS functions, their system has been implemented in various cryptocurrencies, including Bitcoin, which has popularized it.

The two most common and oldest consensus protocols cryptocurrency projects use are Proof of work and Proof of stake. The most heated debate in the crypto field is about which of these two consensus mechanisms is superior: Is it better to have Proof of work or Proof of stake?

The answer to this question is primarily determined by one’s opinions on a few topics. People who feel that global warming is the biggest threat to humanity may claim that excessive energy usage is just intolerable since it will result in the loss of life in the not-too-distant future.

On the other hand, countless people worldwide live in terrible conditions. They do not have the flexibility or financial means to change their circumstances. It might be claimed that Bitcoin and other cryptocurrencies significantly influence these people’s lives and would improve them.

Both options seem to provide enough security to run a blockchain and a cryptocurrency. There may also be other consensus algorithms, such as the Proof of participation, that offers faster transaction times than Proof of Work.

But regarding cryptocurrencies, the Proof of Stake and Proof of Work are the two major consensus algorithms used.

And in this article, we will compare the important features of the two consensus mechanisms. Let’s first look at PoW and PoS and how they work before understanding how PoS differs from PoW.

What Is Proof Of Work?

PoW is the oldest and most tested method of verifying transactions on the Blockchain, and the most popular cryptocurrency, Bitcoin, uses it.

To solve complex mathematical problems, PoW necessitates a large amount of computational resources. Proof of work is a form of decentralized consensus mechanism used in cryptocurrency mining. Bitcoin, the world’s first cryptocurrency, comes to mind as an example.

Proof-of-Work is a decentralized consensus mechanism that requires network members to use their resources to solve an arbitrary math problem that prevents others from playing with the system.

The network necessitates a large amount of processing power, which is why it is referred to as “proof of work.” Virtual miners all around the globe compete to solve a math challenge first to protect and validate proof-of-work blockchains.

The Proof of Work protocol helps us to avoid certain unwanted behaviors in a network. Its name comes from the English Proof of Work (PoW). This protocol works under the concept of requiring a job from the client, which is then verified by the network.

Usually, the requested work consists of performing complex computing operations. The network then verifies these operations. Once they are approved, the client is given access to use the resources of the client.

These operations help to prevent malicious clients from consuming all resources in an uncontrolled manner. A situation that may end up denying the service provided to the rest of the network’s clients.

A very simple example to understand this is the famous captcha put up when you want to register on a website. The web puts this challenge that the visitor has to solve. If you solve it, you will have access to the service. 

This prevents an attacker from creating millions of records and thus crashes the web page. Just as the captcha in a website helps to prevent attackers from creating millions of records, so also does proof of work in a network.

Captcha: I'm not a robot
Credits: Freepik

How Does The PoW Protocol Work?

The Proof of Work works in a reasonably simple way. The process that takes place can be divided into the following major stages:

  • Stage 1: The client or node establishes a connection to the network. At this point, the network assigns you a computationally expensive task. This task must be solved in order to receive an economic incentive.
  • Stage 2: The puzzle resolution begins. This involves using a lot of computing power to solve the riddle delivered. This process is called mining.
  • Stage 3: Once the computational task is solved, the client shares it with the network for verification. At this point, it is quickly verified that the task meets the requirements. Doing so provides access to network resources.  Otherwise, the access and the presented solution to the problem are rejected, and then the checks of protection against double spending are carried out.
  • Stage 4: After confirming that the task has been accomplished, the client accesses the network resources. Thanks to this, you receive a profit for the computational work performed.

These four stages allow and model the operation of the Proof of Work. The ease of this model will enable it to be transferred to different software to take advantage of its potential. But it is in blockchains where we observe greater utility, providing exceptional levels of security despite the low complexity of the protocol, which allows millions to participate concurrently in the network.

What Is Proof Of Stake?

Proof of the Stake (PoS) is a consensus algorithm for the blockchain network. Proof of Stake determines who validates the next block, and it uses computing power instead of decrypting cryptographic issues to verify transactions.

Peercoin is the first cryptocurrency to implement a comprehensive PoS consensus model. Proof of stake was introduced in 2011. Significant energy consumption is needed to expand on the PoS consensus in Bitcoin.

PoS is preferred by many new blockchains because it consumes significantly less energy than PoW. And that is why Ethereum, the second largest blockchain, switched from PoW to PoS on September 15, 2022, thereby reducing its energy use by 99.95%.

The technique behind Proof of stake is that if stakeholders have large amounts of cryptocurrencies, they will do nothing to harm the network. They, therefore, rely on owning a verifier node, with which transactions are validated on the network.

Proof of stake was created as a substitute for Proof of work, which is costly owing to the energy requirements. To Validate nodes, on the other hand, can be as basic as personal computers, requiring no more power than any other computer.

How Proof Of Stake Works

Proof-of-Stake reached consensus by asking users to contribute a portion of their tokens to be selected to validate transaction blocks and rewarded for it. The first factor to be considered in this selection process is the user’s commitment. In PoS, blocks are “forged” instead of mined.

Staking in the “Proof of Stake” means a certain amount in the network is locked as their bet. Use it as collateral to prove the block. Any person who wants to participate in the process must own a share in the network. 

The more users bet, the greater their chances of being selected. The number of bets determines the probability that the node will be chosen as the validator to forge the next block. The more significant the stake, the greater the chance of staking compared to the bet.

In PoS, encouraging participation in authenticating reward blocks is a payment in the form of transaction fees. Unlike the newly created currency in PoW systems.

To avoid thinking that this is an opportunity for the rich node in the network. More and more unique methods are being added to the selection process. The key here is to include a level of opportunity for the selection process to avoid the richest user being chosen to validate transactions, earn rewards, and get richer.

The two most commonly used methods are Random Block Selection and Choose Age Coin.

  1. Random Block Selection: This is where the validator is selected by searching for nodes with the lowest hash value associated with the largest bet.
  2. Choose Age Coin: Nodes are chosen based on the time their tokens have been held as shares. The coins’ age is estimated by multiplying the number of days the coins are held as shares by the number of coins.

Similarities Between Proof Of Work And Proof Of Stake

  1. They both are a consensus mechanism for solving problems in the Blockchain of cryptocurrencies.
  2. Before any decisions are made, members have to come to an agreement on it before it is carried out.
  3. Before proposing a new block, there needs to be Proof that they’ve done some work by both the miners in PoW and validators in PoS.
  4. For Hackers to get access to all cryptocurrencies in the network, they would need to have 51% of the computing power to add a malicious block which is virtually impossible.

Differences Between Proof Of Work And Proof Of Stake

  1. Transactions on the Proof of Work network take longer to process. This is known as block time, and it varies with each project. The typical block duration for Bitcoin is roughly 10 minutes, although projects like Litecoin broadcast a new block every 2.5 minutes. Proof of stake Cryptocurrencies usually process transactions faster, and some transactions take only a few seconds to finalize. In addition, network configuration allows transactions to be transmitted very quickly, allowing validators to be validated much faster.
  2. In Proof of work, the probability of mining blocks is determined by how much of a computational work is done by the miner. In contrast, for Proof of stake, The size of a person’s bet (how many coins they hold) is determined by validating a new block.
  3. In Proof of Work, A reward is given first to the miner who solve the cryptographic puzzle of each block, while for Proof of Stake, the validator does not receive a block reward, instead collecting a network fee as a reward.
  4. In Proof of Work, to add each block to the network, miners must compete using their computer processing power to solve complex puzzles. In contrast, there is no competition in Proof of Stake since an algorithm selects the block maker depending on the user’s bet.
  5. Proof of Work expends a lot of energy and computing power to complete transactions, increasing transaction time. Proof of Stake uses less energy and shortens the consensus time.
  6. Bitcoin is the best-known encryption with a Proof-of-Work consensus-building algorithm that uses the best-known proof-of-work function called SHA256. Others include Ethereum (although in the future, with the update to Ethereum 2.0, it will use a Proof of Stake mechanism), Bitcoin Cash, Monero, Litecoin, and Dogecoin. In contrast, cryptocurrencies that use the Proof of stake include EOS (EOS), Tezos (XTZ), Cardano (ADA), Cosmos (ATOM), and Tron (TRX).
Proof of Work vs. Proof of Stake: tron ​​homepage
Tron’s homepage


Consensus algorithms help Blockchain protocols to reach an agreement between a distributed network. Among those consensus algorithms are two main philosophies: Proof of Stake and Proof of Work.

The Proof of Stake determines the consensus based on the commitment of each user in the network.

In Proof of Work, miners compete for transactions on the network by solving complex mathematical problems, and as a result, they are rewarded with coins.

The biggest problem with PoS is that its security and fault tolerance have not been strictly mathematically demonstrated.

While the bitcoin business is constantly evolving, Proof of Work and Proof of Stake remain the two most often employed techniques. Understanding how they work is critical for gaining insight into how the blockchain works.

While the PoS process consumes significantly less energy than PoW, it’s crucial to realize that there are other factors to consider, such as how secure a blockchain is. PoW is regarded as more secure since it is the oldest and most well-proven validation mechanism.

As the bitcoin ecosystem expands and matures, blockchains that can achieve a high level of security while still being energy efficient will find themselves in a winning position in the near future.

See you soon,

Scaling Parrots

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