Proof of Work (PoW) vs. Proof of Stake (PoS)

Proof of Work (PoW) vs. Proof of Stake (PoS) are two different consensus mechanisms used to secure and validate transactions on a blockchain network.

Proof of Work is the original consensus mechanism used by the first blockchain, Bitcoin. In PoW, validators (miners) compete to solve a complex mathematical problem in order to validate transactions and add them to the blockchain. The first miner to solve the problem is rewarded with a block reward, which includes newly minted coins and transaction fees. This process is known as mining.

Proof of Stake, on the other hand, does not rely on miners solving complex mathematical problems. Instead, validators are chosen to validate transactions and add them to the blockchain based on the amount of cryptocurrency they hold and are willing to “stake” as collateral. This process is called “staking.” The validator who is chosen to create the next block is chosen proportionally to their stake (amount of cryptocurrency they have locked up).

The main difference between PoW and PoS is that PoW is based on computational power and electricity consumption, while PoS is based on the amount of cryptocurrency held by the validator. PoS is considered to be more energy efficient and less prone to centralization than PoW.

Proof of Stake has many different variations like Delegated proof of stake, Leased proof of stake, and more. Each variation has its own advantages and disadvantage and is used by different blockchain projects accordingly.

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