PoW Vs. PoS: A Comparison Between Two Blockchain Consensus Algorithms

Blockchain technology has played a defining role in creating a fervour for change in the market. After forming the strong framework for Bitcoin exchange, the technology is now emerging as mainstream. But what goes behind Blockchain technology plays an important role in creating this difference. The consensus mechanism ensures the legitimisation and security of the records of the transactions that are done on the Blockchain platform.

You will come across different consensus machines, but the two main ones that are catching the attention are Proof of Work or PoW and Proof of Stake or PoS. The workload and network resources impact the functioning of this consensus mechanism. Both PoW and PoS are more sensitive to a network resource. In this blog, we are going to highlight the key differences between the two.

Proof of Work vs Proof of Stake

What is Proof of Work?

To understand the difference between Proof of Work and Proof of Stake, we must have a closer understanding of what is PoW.

Earlier Blockchain was based on the Proof-of-Work (PoW) mechanism. In the case of PoW, the nodes in the Blockchain network reach a consensus by participating in a solution search process where each participating node finds a nonce for the new blocks. When the nonce and the transaction in the new block are used as the new input hash function, the output hash function must be in the range for the acceptance of the block. Because of this, the nonce can be found by continuously trying different nonce values until the miner finds a value that will give an output that is in the target range. When the miner finds the nonce, they will broadcast the blocks and transactions to other nodes. If this new block is verified and determined to be the first block mined after the last block in the chain, it will be attached to the present chain, and thus it becomes the latest block in the chain.

What is PoS?

PoS or Proof of Stake is yet another consensus mechanism. This consensus mechanism is considered to be better than Proof of Work. It is a set of nodes that put their cryptocurrency at stake for validating a transaction. They are called stakers. The more is the amount of stake, and the longer will be the duration of the stake. Thus there are better chances of transaction validation.

There is no need for mining. There is regular upgrading of hardware, and so you can eliminate the energy cost. This transaction validation process is called forging. Thus it eliminates getting into the trap of complex cryptographic puzzles.

Thus there is no need for the entire network to participate in the transaction validation process, which improves scalability.

Which is better?

The next important question that tech geeks always ask is which technology is better. PoW or Proof of Work has been there since the beginning and forms the underlying technology for cryptocurrency exchange, but the amount of energy it consumes is high, thus making it a more expensive consensus mechanism. On the contrary, Proof of Stake or PoS is more efficient and scalable, thus making it a more suitable and energy-efficient solution.

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