Question How to agree on the Blockchain? PoW vs PoS

cryptopirate said May 1, 2023

On a blockchain, agreement is reached by consensus mechanisms. They provide a set of rule, that all nodes have to adhere to in order to be part of a blockchain network. The two most popular consensus mechanisms are Proof of Work (PoW) and Proof of Stake (PoS).Proof of Work is the original consensus mechanism used by Bitcoin and many other blockchain networks. On a PoW blockchain, nodes compete to solve complex mathematical problems. This process is called 'hashing' but we won't go into details about it here. PoW is a competative race between all nodes, to add a new block on the blockchain and it is rewarded with newly minted coins. Right now, the first node to solve the problem to add a new block on Bitcoin is rewarded 6.25 BTC and the nodes that are involved in this process are called miners. They 'mine' for new Bitcoins by securing the blockchain network with their 'work'.

To secure the system the mathematical problem that has to be solved is kept artificially complex, which is a good thing. It is not easy to compete for miners and as much computational power, as well as electricity for powerful nodes, is required to continuously run a PoW blockchain with a high level of security.Proof of Stake, on the other hand, is a different consensus mechanism that was introduced to address some of the issues with PoW. In a PoS blockchain network, nodes are selected to add new blocks to the blockchain based on the amount of cryptocurrency they hold and are willing to "stake" as collateral.The idea behind PoS is that nodes that have a larger stake in the network are less likely to engage in malicious behavior, as they have more to lose if the network is compromised. This means that PoS systems are generally less energy-intensive than PoW systems, as they don't require miners to solve complex problems.In summary, PoW and PoS are two different consensus mechanisms used by blockchain networks to ensure that everyone on the network agrees on the same version of the ledger. PoW is the original mechanism used by Bitcoin, while PoS is a newer mechanism designed to address some of the issues with PoW. While both mechanisms have their pros and cons, PoS is generally considered to be less energy-intensive, while PoW is generally considered to be more decentralized.