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Let’s compare: PoW & PoS
The consensus mechanisms on the Blockchain are numerous, but in this article, we will talk about the most famous of them: Proof of work and Proof of stake. These mechanisms are used to audit every operation on the network, which is approved unanimously based on the principle of decentralization and transparency. Each has a set of cryptocurrencies they use as an approved mechanism for authentication in their Blockchain.
Let's learn about Pow and PoS through their history, how they work, and a simple comparison of their advantages and disadvantages.
Proof of Work
Proof-of-Work is the first unanimous consensus mechanism in cryptocurrency, first introduced as a concept in 1993 by Moni Naor and Cynthia Durk to deter denial-of-service attacks and other cyber violations such as spam on the network. Cryptocurrencies Ethereum, Dash, Bitcoin, Litecoin, and Dogecoin use the PoW consensus mechanism to confirm and record cryptocurrency transactions on their Blockchain through competition between miners.
One of the most critical characteristics of PoW is competition and decentralization. Where programmers compete for the opportunity to mine to win rewards. Bearing in mind that all transactions on the network are under the microscope for everyone to scrutinize, this makes this consensus mechanism decentralized, transparent, and traceable.
Proof of Stake
The Proof-of-Stake consensus mechanism was introduced as an alternative to PoW in 2012 with Peercoin. Currently, cryptocurrencies that use PoS for compatibility in their networks are Tezos, Solana, Cosmos, Polkadot, and more. It is worth noting that it is considered exclusive and somewhat centralized because the right to audit and mine transactions depends on the stake one owns in the Blockchain of a particular cryptocurrency. So, those with larger shares are the only ones to mine. Solana pioneered the Proof-of-Honesty (PoH) mechanism and combined two mechanisms to decentralize its Blockchain. This gave it a hybrid consensus algorithm that became more secure and faster with PoH and PoS.
What is the difference between PoW and PoS?
The advantages of the PoW consensus mechanism are numerous. The most important are high security, crypto rewards for the first miner, transparency, and a decentralized transaction consensus mechanism guarantee. However, one of the downsides to PoW is that it can be inefficient, slow, expensive, environmentally harmful, and energy-intensive as it depends on the competitive advantage of the software power of cryptocurrency mining computers.
As for PoS, the advantages of this consensus mechanism lie in its scalability, the high speed of auditing transactions, and the low cost and low environmental damage due to the lack of exclusive competitors to audit the Blockchain. This, of course, is considered one of the downsides of PoS, which is the exclusivity to those with a high stock of coins for auditing, which contradicts the principle of decentralization.
Which one do I choose?
We cannot tell you what to choose, but we can open the door for you to question and select between them with these numbers for the month of August 2022.