Crypto 101: How Proof of Work is Better than Proof of Stake?
Disclaimer: This blog is for general educational purposes only. The information provided herein does not constitute advice for investment or trading recommendations. Please seek professional advice before taking financial risks.
Points to Ponder: 1. Proof of Work — Known for its Security and / 2. Proof of Stake — Known for its Speed.
What is more important to you, security or speed? Why not both?
The verification method in both proofs of work and proof of stake involves a large number of computer nodes. Transactions are verified by these computer nodes. As a result, the system remains decentralized. A node can be operated by anyone, although it requires a significant amount of technical knowledge.
What is Proof of Work?
Proof of work needs a lot of computer power. Nodes compete for the opportunity to validate data in proof of work by attempting to solve challenging mathematical challenges. That is why such a large amount of computational power is necessary.
Advantages and disadvantages of Proof of Work
Proof of work has the following advantages: security and dependability. Due to the intricacy of the mathematical equations required for verification, manipulating the system is practically impossible. However, high energy consumption and expenditures and a lack of speed are major drawbacks of proof of work.
Within a distributed public network, proof-of-work has proven to be the most reliable approach to preserving consensus and security. This is because, unlike proof-of-stake, proof-of-work necessitates both an initial hardware investment and continuing resource expenditure.
Bitcoin consumes roughly the same amount of energy as a country the size of Sweden every year. The scalability of the proof-of-work method is limited by the cost of high-powered computer systems and their maintenance. Finally, the overall transaction process is not the fastest in the industry. Seven transactions per second are processed by Bitcoin. When compared to blockchains that use other consensus processes, this is a fraction of a percent.
What is Proof of Stake?
The use of proof of stake eliminates the need for sophisticated calculations. As a result, it outperforms proof of work in terms of energy efficiency.
Instead of having an arbitrary competition between miners, determining which node can add a block, validators (the proof-of-stake equivalent of miners) are chosen to find a block based on the number of tokens they have in the proof-of-stake system.
In this system, a user’s “stake,” or the amount of crypto they own, takes the place of the work that miners do in proof-of-work. Because a potential participant must purchase and hold the cryptocurrency in order to be picked to build a block and earn rewards, this staking mechanism secures the network.
Participants must spend money and commit financial resources to the network, similar to how miners in a proof-of-work system must expend electricity. Those who have invested in coins in order to receive these benefits have a vested stake in the network’s future success.
Proof-of-stake uses the same principle as proof-of-work to avoid attacks and counterfeit coins. In a proof-of-stake system, attackers would need to have at least 51 percent of the coin’s supply and control at least 51 percent of the network’s nodes, rather than controlling 51 percent of the mining hashrate and nodes as in a proof-of-work system.
Final Thoughts!
As of writing, Bitcoin is still the King, Proof of work will still be considered also king when it comes to security and decentralization. For now, we can trade speed with security. In this crypto world that is in the wild wild west, security is more important other than anything else. Although Proof of stake wins in speed, however, those financial transactions requiring the highest security might opt for a proof-of- blockchain. When that day comes when speed and security combine, for sure we will be having a bright blockchain future.
Source:
https://www.fool.com/investing
https://blockworks.co/proof-of-work-vs-proof-of-stake
About the author
Brayan Nelson is a hobby writer and currently a university lecturer while being an intern in an NFT project. On Medium, he writes about his journey of connection and education in Crypto, NFT, and the Metaverse. Subscribe to his newsletter to be the first to read his blog story. You can also reach out to him via e-mail at bnelsonsep3@gmail.com
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