Proof of Work vs Proof of Stake

guide_featured_photo

Table of contents

  1. Empty
  2. Why Proof of Stake or Proof of Work Exists
  3. What Is Proof of Work (PoW)?
  4. What Is Proof of Stake (PoS)?
  5. Conclusion

Empty

{"blocks":[{"key":"7nsef","text":"The crypto world isn’t new to the financial scene. After all, the current leading cryptocurrency, Bitcoin, was first introduced in 2009. For altcoin investments to work, however, they need a mechanism of consensus. There are two present systems in place: proof of work and proof of stake. This article tackles the title, proof of work vs proof of stake, meaning, it’ll define how each mechanism works. Additionally, it goes through the pros and cons of each.","type":"unstyled","depth":0,"inlineStyleRanges":[{"offset":0,"length":459,"style":"color-rgb(0,0,0)"},{"offset":0,"length":459,"style":"bgcolor-transparent"},{"offset":0,"length":459,"style":"fontsize-11pt"},{"offset":0,"length":459,"style":"fontfamily-Arial"}],"entityRanges":[],"data":{}}],"entityMap":{}}

Why Proof of Stake or Proof of Work Exists

{"blocks":[{"key":"9u8dn","text":"Before understanding what proof of stake and proof of work is, you should know why the crypto field needs them.","type":"unstyled","depth":0,"inlineStyleRanges":[{"offset":0,"length":111,"style":"color-rgb(0,0,0)"},{"offset":0,"length":111,"style":"bgcolor-transparent"},{"offset":0,"length":111,"style":"fontsize-11pt"},{"offset":0,"length":111,"style":"fontfamily-Arial"}],"entityRanges":[],"data":{}},{"key":"9nm2n","text":"Cryptocurrencies depend on blockchain technology where cryptos form blocks of altcoins and are then added to a chain. ","type":"unstyled","depth":0,"inlineStyleRanges":[{"offset":0,"length":118,"style":"color-rgb(0,0,0)"},{"offset":0,"length":118,"style":"bgcolor-transparent"},{"offset":0,"length":118,"style":"fontsize-11pt"},{"offset":0,"length":118,"style":"fontfamily-Arial"}],"entityRanges":[],"data":{}},{"key":"qmge","text":"E-currencies need to be validated through a consensus mechanism as well. That’s how investors can create more altcoins and gain interest from their money.","type":"unstyled","depth":0,"inlineStyleRanges":[{"offset":0,"length":154,"style":"color-rgb(0,0,0)"},{"offset":0,"length":154,"style":"bgcolor-transparent"},{"offset":0,"length":154,"style":"fontsize-11pt"},{"offset":0,"length":154,"style":"fontfamily-Arial"}],"entityRanges":[],"data":{}},{"key":"1oavl","text":"Enter the two systems that operate to approve of any crypto that goes through. Those would be proof of stake on one hand and proof of work on the other. ","type":"unstyled","depth":0,"inlineStyleRanges":[{"offset":0,"length":153,"style":"color-rgb(0,0,0)"},{"offset":0,"length":153,"style":"bgcolor-transparent"},{"offset":0,"length":153,"style":"fontsize-11pt"},{"offset":0,"length":153,"style":"fontfamily-Arial"}],"entityRanges":[],"data":{}},{"key":"bphct","text":"Each function differently, but essentially, their purpose is one. That said, let’s explain how each mechanism works.","type":"unstyled","depth":0,"inlineStyleRanges":[{"offset":0,"length":116,"style":"color-rgb(0,0,0)"},{"offset":0,"length":116,"style":"bgcolor-transparent"},{"offset":0,"length":116,"style":"fontsize-11pt"},{"offset":0,"length":116,"style":"fontfamily-Arial"}],"entityRanges":[],"data":{}}],"entityMap":{}}

What Is Proof of Work (PoW)?

{"blocks":[{"key":"2t3c4","text":"When the anonymous inventor of crypto, Satoshi Nakamoto first created Bitcoin, he created the proof of work system along with it. The mechanism was used to operate the flow of altcoins and create them.","type":"unstyled","depth":0,"inlineStyleRanges":[{"offset":0,"length":201,"style":"color-rgb(0,0,0)"},{"offset":0,"length":201,"style":"bgcolor-transparent"},{"offset":0,"length":201,"style":"fontsize-11pt"},{"offset":0,"length":201,"style":"fontfamily-Arial"}],"entityRanges":[],"data":{}},{"key":"13gsd","text":"Proof of work relies on powerful computers working to solve complex mathematical equations. These arbitrary comps compete against each other to be the first ones answering these mathematical formulas. That’s how users get to make more crypto.","type":"unstyled","depth":0,"inlineStyleRanges":[{"offset":0,"length":242,"style":"color-rgb(0,0,0)"},{"offset":0,"length":242,"style":"bgcolor-transparent"},{"offset":0,"length":242,"style":"fontsize-11pt"},{"offset":0,"length":242,"style":"fontfamily-Arial"}],"entityRanges":[],"data":{}},{"key":"5i2km","text":"This process is otherwise known as mining since it uses up a lot of electricity and takes up a lot of time. This is also why not many cryptocurrencies still use proof of work.","type":"unstyled","depth":0,"inlineStyleRanges":[{"offset":0,"length":175,"style":"color-rgb(0,0,0)"},{"offset":0,"length":175,"style":"bgcolor-transparent"},{"offset":0,"length":175,"style":"fontsize-11pt"},{"offset":0,"length":175,"style":"fontfamily-Arial"}],"entityRanges":[],"data":{}},{"key":"2c94t","text":"Pros of Proof of Work","type":"header-three","depth":0,"inlineStyleRanges":[{"offset":0,"length":21,"style":"color-rgb(67,67,67)"},{"offset":0,"length":21,"style":"bgcolor-transparent"},{"offset":0,"length":21,"style":"fontsize-14pt"},{"offset":0,"length":21,"style":"fontfamily-Arial"}],"entityRanges":[],"data":{}},{"key":"cd2uk","text":"Since the method behind proof of work is extensive, it encourages healthy competition among investors, meaning those who work the hardest, earn more rewards.","type":"unstyled","depth":0,"inlineStyleRanges":[{"offset":0,"length":157,"style":"color-rgb(0,0,0)"},{"offset":0,"length":157,"style":"bgcolor-transparent"},{"offset":0,"length":157,"style":"fontsize-11pt"},{"offset":0,"length":157,"style":"fontfamily-Arial"}],"entityRanges":[],"data":{}},{"key":"1gnua","text":"Thorough mining may also lead to breakthroughs in computing programs. This helps the crypto industry overall and aids engineers to come up with more efficient ways to mine.","type":"unstyled","depth":0,"inlineStyleRanges":[{"offset":0,"length":172,"style":"color-rgb(0,0,0)"},{"offset":0,"length":172,"style":"bgcolor-transparent"},{"offset":0,"length":172,"style":"fontsize-11pt"},{"offset":0,"length":172,"style":"fontfamily-Arial"}],"entityRanges":[],"data":{}},{"key":"e1spu","text":"Not only that, but the proof of work system makes use of trapped energy found in some third world lands. These natural energy sources will otherwise go to waste since the country lacks the means to make use of them.","type":"unstyled","depth":0,"inlineStyleRanges":[{"offset":0,"length":215,"style":"color-rgb(0,0,0)"},{"offset":0,"length":215,"style":"bgcolor-transparent"},{"offset":0,"length":215,"style":"fontsize-11pt"},{"offset":0,"length":215,"style":"fontfamily-Arial"}],"entityRanges":[],"data":{}},{"key":"13uh9","text":"Cons of Proof of Work","type":"header-three","depth":0,"inlineStyleRanges":[{"offset":0,"length":21,"style":"color-rgb(67,67,67)"},{"offset":0,"length":21,"style":"bgcolor-transparent"},{"offset":0,"length":21,"style":"fontsize-14pt"},{"offset":0,"length":21,"style":"fontfamily-Arial"}],"entityRanges":[],"data":{}},{"key":"gacf","text":"One of the PoW system’s primary disadvantages is the immense amount of energy required to make it function. ","type":"unstyled","depth":0,"inlineStyleRanges":[{"offset":0,"length":108,"style":"color-rgb(0,0,0)"},{"offset":0,"length":108,"style":"bgcolor-transparent"},{"offset":0,"length":108,"style":"fontsize-11pt"},{"offset":0,"length":108,"style":"fontfamily-Arial"}],"entityRanges":[],"data":{}},{"key":"1tv58","text":"This has dangerous consequences on the environment due to the high percentage of e-waste that’s released.","type":"unstyled","depth":0,"inlineStyleRanges":[{"offset":0,"length":105,"style":"color-rgb(0,0,0)"},{"offset":0,"length":105,"style":"bgcolor-transparent"},{"offset":0,"length":105,"style":"fontsize-11pt"},{"offset":0,"length":105,"style":"fontfamily-Arial"}],"entityRanges":[],"data":{}},{"key":"f9v1v","text":"While efforts have been made to use hydroelectric or solar energy to make electricity and fuel comping farms, proof of work blockchains consume more power than entire countries! ","type":"unstyled","depth":0,"inlineStyleRanges":[{"offset":0,"length":178,"style":"color-rgb(0,0,0)"},{"offset":0,"length":178,"style":"bgcolor-transparent"},{"offset":0,"length":178,"style":"fontsize-11pt"},{"offset":0,"length":178,"style":"fontfamily-Arial"}],"entityRanges":[],"data":{}},{"key":"4rak9","text":"Even still, proof of work operates with the help of various hardware. Their lifespans can be quite short because of poor surrounding conditions, such as high humidity and inadequate ventilation. ","type":"unstyled","depth":0,"inlineStyleRanges":[{"offset":0,"length":195,"style":"color-rgb(0,0,0)"},{"offset":0,"length":195,"style":"bgcolor-transparent"},{"offset":0,"length":195,"style":"fontsize-11pt"},{"offset":0,"length":195,"style":"fontfamily-Arial"}],"entityRanges":[],"data":{}},{"key":"23fqf","text":"As a result, old equipment needs to be constantly thrown out and replaced by new ones. This causes further damage to the ecosystem.","type":"unstyled","depth":0,"inlineStyleRanges":[{"offset":0,"length":131,"style":"color-rgb(0,0,0)"},{"offset":0,"length":131,"style":"bgcolor-transparent"},{"offset":0,"length":131,"style":"fontsize-11pt"},{"offset":0,"length":131,"style":"fontfamily-Arial"}],"entityRanges":[],"data":{}}],"entityMap":{}}

What Is Proof of Stake (PoS)?

{"blocks":[{"key":"ah7kt","text":"Unlike the PoW system, proof of stake works in a less complicated way. The PoS mechanism doesn’t require ‘proof of your work’ by solving complicated math. ","type":"unstyled","depth":0,"inlineStyleRanges":[{"offset":0,"length":155,"style":"color-rgb(0,0,0)"},{"offset":0,"length":155,"style":"bgcolor-transparent"},{"offset":0,"length":155,"style":"fontsize-11pt"},{"offset":0,"length":155,"style":"fontfamily-Arial"}],"entityRanges":[],"data":{}},{"key":"35v3p","text":"Instead, PoS needs to see proof of how much of your money you’re willing to ‘stake’ in order to gain more crypto. The more staking you do, the more you stand to make.","type":"unstyled","depth":0,"inlineStyleRanges":[{"offset":0,"length":166,"style":"color-rgb(0,0,0)"},{"offset":0,"length":166,"style":"bgcolor-transparent"},{"offset":0,"length":166,"style":"fontsize-11pt"},{"offset":0,"length":166,"style":"fontfamily-Arial"}],"entityRanges":[],"data":{}},{"key":"9lavm","text":"While miners prefer proof of work systems, those who value proof of stake mechanisms are known as validators. That’s because those staking their crypto are randomly offered the chance to approve of altcoins before they join a chain.","type":"unstyled","depth":0,"inlineStyleRanges":[{"offset":0,"length":232,"style":"color-rgb(0,0,0)"},{"offset":0,"length":232,"style":"bgcolor-transparent"},{"offset":0,"length":232,"style":"fontsize-11pt"},{"offset":0,"length":232,"style":"fontfamily-Arial"}],"entityRanges":[],"data":{}},{"key":"3877t","text":"The golden rule here is you gain more crypto the more you stake, and the longer you’ve been staking your crypto, the higher your chances are to be picked as a validator. ","type":"unstyled","depth":0,"inlineStyleRanges":[{"offset":0,"length":171,"style":"color-rgb(0,0,0)"},{"offset":0,"length":171,"style":"bgcolor-transparent"},{"offset":0,"length":171,"style":"fontsize-11pt"},{"offset":0,"length":171,"style":"fontfamily-Arial"}],"entityRanges":[],"data":{}},{"key":"e5ne2","text":"Pros of Proof of Stake","type":"header-three","depth":0,"inlineStyleRanges":[{"offset":0,"length":22,"style":"color-rgb(67,67,67)"},{"offset":0,"length":22,"style":"bgcolor-transparent"},{"offset":0,"length":22,"style":"fontsize-14pt"},{"offset":0,"length":22,"style":"fontfamily-Arial"}],"entityRanges":[],"data":{}},{"key":"fvsva","text":"The main advantage to using a proof of stake system over proof of work is the fact that it requires less manpower and funding. You don’t need mega computers with complex hardware using up a lot of electricity just to make a few altcoins.","type":"unstyled","depth":0,"inlineStyleRanges":[{"offset":0,"length":237,"style":"color-rgb(0,0,0)"},{"offset":0,"length":237,"style":"bgcolor-transparent"},{"offset":0,"length":237,"style":"fontsize-11pt"},{"offset":0,"length":237,"style":"fontfamily-Arial"}],"entityRanges":[],"data":{}},{"key":"a1d33","text":"Additionally, this also means that the proof of stake system is more efficient since throughput is steadily boosted. Removing the complexity of solving mathematical problems makes it easier for crypto transactions to go through.","type":"unstyled","depth":0,"inlineStyleRanges":[{"offset":0,"length":228,"style":"color-rgb(0,0,0)"},{"offset":0,"length":228,"style":"bgcolor-transparent"},{"offset":0,"length":228,"style":"fontsize-11pt"},{"offset":0,"length":228,"style":"fontfamily-Arial"}],"entityRanges":[],"data":{}},{"key":"bbv7p","text":"Not only is PoS good for the environment, but a validator using a proof of stake system can approve transactions anywhere at any time. ","type":"unstyled","depth":0,"inlineStyleRanges":[{"offset":0,"length":135,"style":"color-rgb(0,0,0)"},{"offset":0,"length":135,"style":"bgcolor-transparent"},{"offset":0,"length":135,"style":"fontsize-11pt"},{"offset":0,"length":135,"style":"fontfamily-Arial"}],"entityRanges":[],"data":{}},{"key":"44nqs","text":"Plus, the values of cryptocurrencies that use proof of stake have the chance to steadily increase since their consensus mechanism is easy functioning. ","type":"unstyled","depth":0,"inlineStyleRanges":[{"offset":0,"length":151,"style":"color-rgb(0,0,0)"},{"offset":0,"length":151,"style":"bgcolor-transparent"},{"offset":0,"length":151,"style":"fontsize-11pt"},{"offset":0,"length":151,"style":"fontfamily-Arial"}],"entityRanges":[],"data":{}},{"key":"dm9c8","text":"Cons of Proof of Stake","type":"header-three","depth":0,"inlineStyleRanges":[{"offset":0,"length":22,"style":"color-rgb(67,67,67)"},{"offset":0,"length":22,"style":"bgcolor-transparent"},{"offset":0,"length":22,"style":"fontsize-14pt"},{"offset":0,"length":22,"style":"fontfamily-Arial"}],"entityRanges":[],"data":{}},{"key":"86jtc","text":"Proof of stake systems, unlike proof of work systems, lean towards becoming centralized. In other words, PoS mechanisms have yet to function at the same size and capacity as PoW ones. This is because minimum requirements are needed for PoS to function properly.","type":"unstyled","depth":0,"inlineStyleRanges":[{"offset":0,"length":261,"style":"color-rgb(0,0,0)"},{"offset":0,"length":261,"style":"bgcolor-transparent"},{"offset":0,"length":261,"style":"fontsize-11pt"},{"offset":0,"length":261,"style":"fontfamily-Arial"}],"entityRanges":[],"data":{}},{"key":"e99m1","text":"Another disadvantage of using proof of stake systems is their compromised security. It doesn’t mean that they’re easy to hack into. However, since it’s incredibly easy to join the PoS network, anyone can come to control the majority of the crypto blocks.","type":"unstyled","depth":0,"inlineStyleRanges":[{"offset":0,"length":254,"style":"color-rgb(0,0,0)"},{"offset":0,"length":254,"style":"bgcolor-transparent"},{"offset":0,"length":254,"style":"fontsize-11pt"},{"offset":0,"length":254,"style":"fontfamily-Arial"}],"entityRanges":[],"data":{}},{"key":"blgep","text":"As a result, attackers might end up becoming validators who can approve of corrupt altcoins. This changes the mechanism of the entire blockchain, thus making it easier to steal anyone’s cryptocurrencies. ","type":"unstyled","depth":0,"inlineStyleRanges":[{"offset":0,"length":204,"style":"color-rgb(0,0,0)"},{"offset":0,"length":204,"style":"bgcolor-transparent"},{"offset":0,"length":204,"style":"fontsize-11pt"},{"offset":0,"length":204,"style":"fontfamily-Arial"}],"entityRanges":[],"data":{}},{"key":"bjhc4","text":"Finally, working with proof of stake encourages the hoarding of coins. Investors, typically inexperienced ones, accumulate crypto that they later on stake and build blocks with. This reduces the chances of others becoming validators and making money too.","type":"unstyled","depth":0,"inlineStyleRanges":[{"offset":0,"length":254,"style":"color-rgb(0,0,0)"},{"offset":0,"length":254,"style":"bgcolor-transparent"},{"offset":0,"length":254,"style":"fontsize-11pt"},{"offset":0,"length":254,"style":"fontfamily-Arial"}],"entityRanges":[],"data":{}}],"entityMap":{}}

Conclusion

{"blocks":[{"key":"97go3","text":"This article’s main aim was to explain the proof of work vs proof of stake debate. Proof of work was the first of the two consensus mechanisms used to validate altcoins. Bitcoin is the only crypto that still actively uses it. Other cryptocurrencies are either working towards implementing the proof of stake system or are already using it. Either way, it’s recommended that you invest in altcoins that use PoS. Mainly since it has a lesser environmental impact than PoW and is easier to understand. ","type":"unstyled","depth":0,"inlineStyleRanges":[{"offset":0,"length":499,"style":"color-rgb(0,0,0)"},{"offset":0,"length":499,"style":"bgcolor-transparent"},{"offset":0,"length":499,"style":"fontsize-11pt"},{"offset":0,"length":499,"style":"fontfamily-Arial"}],"entityRanges":[],"data":{}}],"entityMap":{}}