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The Downsides Of PoS Vs PoW — Episode 04.


The Downsides of PoS vs PoW.

Hi there, welcome back, this is Emerging geek and I’m Somesh who’d love to speak about gadgets and technology which helps us to transform our lives. Today, let’s talk about the downsides of proof of work and proof of stake system. And finally, let’s look at an overview of what is Delegated POS system is?

Also, those who have not listened to my previous episodes, I’d strongly recommend them to check the episodes for a basic introduction of blockchain and its algorithm and in those episodes, I did explain about Proof of Stake as well as the Proof of Work system in detail. Please check the episodes for better insights.

Source: Entertainmentheat

That said, without any further ado Let’s get started.

Starting a mining process under the Proof of Work system is very expensive. And, cryptocurrencies like Bitcoins do require more computational power to mine, when the number of users in the network grows higher. Here, the computational power is directly proportional to the cost included in the mining process. Even though Bitcoin is of high value, it might incur a loss for the miner in the process of mining. To mine a bitcoin, a miner spends about 1.57 households of electricity which is reported from sources back in 2015.


And, also, cryptocurrency analyst in the market forecasted that the mining a bitcoin in the year 2020 might be equal to the electricity consumption of Denmark.

Let’s say if a person wants to get into the network of the cryptocurrency, for the reason of financial empowerment. But, as it is expensive to start, it demands the new user to invest a large sum of money to be a part of the network. This high financial barrier defeats the entire purpose of the network. The worst part would be this high financial barrier also favor people who are wealthy and they don’t find any barriers to invest.

The situation where the wealthy person finds himself comfortable to invest in the network. He is also prone to take over the 51% stake in the network which is eventually called a 51% attack. Investing more than 51% in the network will make the wealthy individuals to dominate and to control the mining power of the network. This will ruin the agreement as well as it will destroy the integrity of the network.

And, as I said, if the mining is not profitable for the miners, then the people will not be motivated to contribute to the network. The non-profitable mining is a threat to the network and it slowly stops the existence and functioning of the network.

The mining can be manipulated by the wealthy miners by using ASIC rigs. ASIC’s are called Application-specific integrated circuit. ASICs are the new generation machines which are designed specifically to solve the puzzle of the network and this has the capability to mine coins in no time. Initially, mining of Bitcoin was through CPUs and then due to the rapid growth of miners in the network, the phase-shifted from CPUs to GPUs which are called as graphics cards. The GPUs can generate several megabytes of hashes in Seconds. Now, by using ASICs, the miners are able to generate thousands of Giga hashes in seconds. This eventually transforms their normal mining rigs to super rigs. However, FPGAs played a primary role during the evolution of mining equipment but not efficiently as others. And, these are the downsides of Proof of Work.


The active participants in the network argue that there is nothing at stake in Proof of Stake system. This is true if we compare the users stake locked up in the validators pool in the PoS system to the investments made by the miner to mine the coin in the PoW system. Also, the bad players in this system do not have to sacrifice any time, effort, or money to set up an attack of any sort. But, in case of PoW, when the miners take control of more than 51% of the network, the honest chain in the network will break into a separate chain called Fork and the bad miner would have wasted a significant amount of time and money to set up an attack.

In the PoS system, sometimes the individuals are liable to receive rewards even if it is backdated and also, even if they’re not contributed towards the agreement. Here, the individual would be able to simply turn their computers on once a month and successfully stake without any penalties as per the CASPER protocol. This, in turn, increases the chances for the individual for getting validated in the pool. This Casper protocol allows an individual to hold the stake maximum of up to 90 days.

Also, the risk of centralization in a Proof of stake system is a bit lower compared to the PoW system but, a group of people could potentially buy a majority of coins and can achieve their consensus which is called as 51% attack. As the probability of a 51% attack is less due to the individual is completely invested in coins as a stake in the validators pool. To take over the network, they’d need to liquidate all the profits which cannot be done if they own a majority in the PoS environment.

A delegate is a person who is authorized to represent others in a specific network. For example, let’s consider our politicians, they’re the delegates who represent the common people in the parliament.

This DPos was created by a blockchain engineer called Daniel Larimer. DPoS was created to speed up the transactions and block creation, while not compromising the decentralized structure as it acts as the heart of the blockchain. DPoS is the next step in the evolution of consensus mechanisms. It is built on the original Proof of Stake consensus mechanism and it drastically increases speed and scalability of the network.

In the traditional Proof of Stake consensus mechanism, a user can put their coins at stake, thereby earning the right to validate transactions, forge blocks, and earn associated rewards. DPoS, a variation of the Proof of Stake consensus, seeks to reach consensus more efficiently.

The DPoS model is a democratic consensus model which has some notable changes from the Proof of Stake method that primarily affects its decentralization and scalability.

Like every other consensus system, DPoS do have a voting algorithm to find the appropriate validators so-called Witnesses in the Delegated PoS environment. The active users will vote to select the other users called witnesses, who they trust to validate the transactions. The top tier of witnesses who have collected the most votes earns the right to validate the transactions. Also, the users do have the advantage to delegate their voting power or rights to other users in the network. And, the delegated user would be able to vote on behalf of the actual user. The votes are calculated based on the size of each voter’s stake. A user need not have large stake to enter the top tier of witnesses. Rather, votes from users with large stakes will improve the witnesses chances of getting validated.

The number of witnesses in the top tier is restricted to a certain amount based on the consensus mechanism.

These witnesses are responsible for validating transactions and creating blocks and are in return awarded the transaction fees for the validation. The witnesses would be able to prevent a transaction from being added into the new block but they’d not be able to tamper or modify the details of any transaction. Thus they’re equivalent to the miners in the Proof of work system.

In DPoS, Voting is a continuous process and each witness in the top tier is always at risk of being replaced by a user who gets more votes and is therefore considered a more trusted witness.

As the blockchain grows, it becomes very competitive to become or to remain a consistent witness in the top tier. Users can also vote to remove a witness in the top tier who has lost their trust.

The active Users in DPoS systems also vote for a group called ‘delegates’ as such as witnesses. The delegates are the trusted parties responsible for maintaining the network. These delegates oversee the governance and performance of the entire blockchain protocol but do not play a role in transaction validation and block production which is completely handled by witnesses.

For example, the delegates can propose changing the size of a block, or the amount, a witness should be paid in return for validating a block. Once the delegates propose such changes, the blockchain’s users conduct voting to adopt them or not.

Delegates are not paid positions, but parameters that are under their competence are not expected to change very often. After major decisions being made, some DPoS blockchains offer a short opportunity window for re-electing delegates if the proposed changes were not approved by the active voters.

This makes the system more reliable and trusted compared to other consensus mechanisms. I believe this system opens the space for democracy in the network, for sure.

So let’s see the advantages and downsides of DPoS in my next episode. That’s it for today…

And, Before signing off, I’d like to inform you that I’m gonna run series of episodes on the blockchain technology so please feel free to drop your reviews and feedback so that I’d be able to organize my upcoming episodes.

This would surely help me to improve my content quality. Hope you had some great fun. see you soon. until then signing of Somesh.

Have a great day ahead!




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Someshwaran M

I am an Open-Source Enthusiast. I learned a lot from the Open-Source community and I love how collaboration, knowledge sharing happens through Open-Source!