What are PoS and PoW? What's the difference? Which is better?

What are PoS and PoW? What's the difference? Which is better? Both have their own advantages and disadvantages, and the choice between the two depends largely on the specific use case. This article will discuss "PoS vs. PoW: What are they? Which one to choose?". Today, the editor of this site will give you a detailed introduction to PoS and PoW. What are they? What's the difference? Which one is better? I hope you all like it!

PoS vs. PoW: What are they?

The two consensus mechanisms used to confirm transactions on blockchain networks are Proof of Work (PoW) and Proof of Stake (PoS).

The first blockchain Bitcoin uses PoW. This consensus mechanism, also known as mining, uses hardware to provide node verification and generate new blocks for the blockchain. Computers usually cost more because they have to do these complex calculations, and the electricity bill can be quite expensive. Therefore, mining is not a maintainable system, and not everyone can participate as a miner. PoW also raises concerns about its environmental impact.

Proof-of-Stake (PoS) is a consensus mechanism where validators “stake” a portion of cryptocurrency tokens to become validators on the network. Validators are then selected to create new blocks and receive rewards based on their staked amount. Unlike PoW, PoS does not require miners to solve mathematical problems and is therefore generally considered more energy efficient and environmentally friendly.

Which one is better, PoS or PoW?

While there are trade-offs between PoW and PoS, PoS is generally considered to be more efficient and environmentally friendly than PoW. However, PoW has been field-tested in Bitcoin's production environment for more than a decade, which gives it advantages in terms of security and immutability. While PoS is still a relatively new and untested mechanism, there are still concerns about its security and vulnerability to various attacks.

Ultimately, both consensus mechanisms have their advantages and disadvantages, and which one to choose depends on the specific needs and goals of a particular blockchain project. Some projects may prioritize decentralization and resistance to 51% attacks, and therefore may prefer PoW, while other projects may prioritize energy efficiency and cost reduction, and therefore may choose PoS.

What is proof of work?

Proof-of-work is the earliest and most widely used consensus algorithm. It was proposed by Satoshi Nakamoto, the founder of Bitcoin, and is used in the Bitcoin network and many other cryptocurrency networks. The principle of workload proof is to allow participants in the network (also called miners) to compete to generate new blocks by using computing power and obtain corresponding rewards. This prevents malicious attackers from tampering or forging data on the blockchain, as they would be able to do so at great cost.

The advantages of proof of work are:

• High security: proof of work can resist 51% attacks, that is, when an attacker has more than half of the computing power of the entire network, he can control the blockchain and conduct double attacks. Flowers and other malicious behavior. But such an attack is very expensive and difficult to implement.
• Strong fairness: Proof of work can ensure that every miner has an equal chance to obtain block rewards, as long as they invest enough computing power. This can encourage more miners to participate in the network and increase the decentralization of the network.

The disadvantages of proof of work are:

• Waste of energy: Proof of work requires consuming a lot of electricity and hardware resources for calculation, which will cause environmental pollution and waste of resources. It is estimated that the Bitcoin network consumes as much electricity annually as a medium-sized country.
• Limited scale: Proof of work needs to maintain a fixed block time and difficulty to maintain the stability of the network. This limits the throughput and scalability of the blockchain, resulting in slow transaction speeds and high fees.

What is Proof of Stake?

Proof-of-stake is a later consensus algorithm that aims to solve some of the problems of proof-of-work, such as energy waste and limited scale. The principle of proof of equity is to allow participants in the network (also called validators) to obtain the right to generate new blocks by locking a certain number of tokens and receive corresponding rewards. This reduces the impact of computing power on network security and relies more on token holders’ trust in the value of the network.

The advantages of Proof of Stake are:

• Energy saving and environmental protection: Proof of Stake does not need to consume a lot of electricity and hardware resources for calculation, but only needs to keep a certain number of tokens in the wallet. This significantly reduces the costs and resources required to run the network.
• Flexible scale: Proof of Stake can dynamically adjust block time and difficulty according to network status and needs to improve the efficiency and scalability of the network. This will increase the throughput and transaction speed of the blockchain and reduce transaction fees.

The disadvantages of Proof of Stake are:

• Low security: Proof of stake may face some new security threats, such as nothing-at-stake attack, that is, when a validator verifies blocks on multiple forks simultaneously to obtain more Rewards without any risk or loss.
• Poor fairness: Proof of Stake may lead to uneven distribution of tokens, that is, the rich get richer and the poor get poorer. Because the selection and rewards of validators are proportional to the number of tokens they hold, this will make it easier for large players to control the network and obtain more benefits.

The difference between Ethereum POW and POS

Ethereum 2.0 transforms the original POW mechanism into a POS mechanism. This move has a greater impact on miners. First, let’s have a general understanding of the POW mechanism. The full name of POW is Proof of Work, which is proof of work. , simply put, how many rewards you can get depends on the performance of your machine. The full name of POS is Proof of Stake, which can be understood as the income generated by the amount and time of holding rewards. There will be an interest-issuing system, which is equivalent to placing it in a bank to generate interest.

The difference between Pow and POS is:

First of all, the sources of rewards are different. In POW, the performance of the machine determines who can receive rewards. The POS determines who can receive the reward based on the "time unit" and "number of rewards." Secondly, POW is based on the auditor's "distrust" of accounting nodes, and POS is based on the "trust" of small voters in large voters.

Simply put, the meaning of POW is actually "the threshold for fraud", and quality audits are more important; POS adopts the logic of simulating commercial equity. Compared with POW, the threshold for fraud is greatly lowered. Under certain circumstances, it can Profit by counterfeiting or even destroying the entire system.

The difference between POW and POS mining

The differences between PoS mining and PoW mining are as follows:

First of all, the sources of computing power are different

In PoW mining, it is decided who can mine more mines It is the computing speed of the mining machine (CPU, graphics card, ASIC, etc.), but it is different in PoS. PoS mining does not require you to purchase additional mining equipment, nor does it take up a lot of computing resources. In PoS, what determines who is more likely to mine coins is the "number of coins" and "coin age." The number of coins is very simple. For example, if you have 100 coins, then the weight of your coin is 100. Coin age is the time difference from the last change of the coin (transaction, mining, etc.) to the current time point. The more coins there are and the longer the coins are, the more likely it is to mine blocks.

Secondly, the number of coins produced is different

In PoW, the coins produced in a block have nothing to do with the coins you hold, but in PoS, the more coins you use for mining, the age of your coins The longer it is, the more coins you mine. For example, if you have 1,000 Apple coins, and these Apple coins have not been used for half a year (183 days), then the number of coins you mine is as follows:

1000 (number of coins) * 183 (coin age) * 15% (interest rate )=274.5 (coins)

Of course, generally our number of coins will be more and the currency age will be shorter, so the coins eventually mined will be different. But the rough formula is this. Since 2018, many digital currencies, including ETH, have begun to shift from Pow to PoS, or adopt a hybrid model of the two. Why is this?

Mainly because under the POW mechanism, miners consume huge computing power and increase the cost of handling fees. Once the government bans the mining farm, the entire network faces the threat of paralysis. However, under the POS mechanism, mining difficulty has little to do with computing power and has the greatest relationship with currency holdings and time, so there is no high cost of electricity consumption. Moreover, the miners themselves are currency holders and will not raise the handling fees too high if they have transfer needs. Therefore, network transfers are faster and cheaper than the POW mechanism, which has become a new development direction.

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