Proof of Work vs Proof of Stake (PoW Vs PoS) : Everything You Need To Know


Proof of Work vs Proof of Stake (PoW Vs PoS) : Everything You Need To Know

What is Consensus mechanis? – Consensus mechanisms (also known as consensus protocols or consensus algorithms) allow distributed systems (networks of computers) to work together and stay secure. Consensus in cryptocurrency follows the same idea as consensus between people. The difference is it’s computers coming to a consensus AKA an agreement about whether a transaction is valid or not.

Type of consensus mechanism

1 Proof of work (PoW)
2 Proof of Stake (PoS)

What is Proof of Work(PoW)? 

Proof of Work (PoW) is the mechanism that allows the decentralized Ethereum network to come to consensus, or agree on things like account balances and the order of transactions. This prevents users “double spending” their coins and ensures that the Ethereum chain is incredibly difficult to attack or overwrite.

Any computer that wants to process transactions on a proof of work cryptocurrency blockchain like Bitcoin needs to solve a complex equation to earn the right to do so. This costs time and energy to do.

If this sounds tedious and arbitrary, it’s because it is. This idea of work exists exclusively as a means of protecting a cryptocurrency from manipulation by the computers connected to its blockchain

What is Proof of Stake(PoS)?

Proof of stake is a type of consensus mechanism used by blockchain networks to achieve distributed consensus.

It requires users to stake their coin or token to become a validator in the network. Validators are responsible for the same thing as miners in proof-of-work: ordering transactions and creating new blocks so that all nodes can agree on the state of the network.

Instead of using large amounts of computing power and energy to solve an equation to process transactions, a cryptocurrency coin is staked i.e. locked on the blockchain to earn the right to do so.

The length of time a cryptocurrency must be staked to process transactions can vary, as can the minimum amount of coins or tokens a computer must lock up as stake.

Logically, the more cryptocurrency you stake, the more likely you are to process transactions and create a block.

Also Read: Best 5 Free Crypto Wallets to store crypto safely my Top 5 pick

Proof of work (PoW): Advantages and Disadvantage

In theory, anyone can connect their computer to a proof of work cryptocurrency to process transactions and earn cryptocurrency as a reward for doing so.

However, over the years companies have developed specialized computers called application specific integrated circuit machines or ASICs for short. This is gradually centralizing PoW cryptocurrencies

What’s worse is that when a new and improved ASIC is released, the older model usually ends up in a landfill, and this is one of the many environmental concerns about proof of work cryptocurrency mining

PoW(proof of work) uses up so much energy that it’s bad for the environment. However, keeping this environmental concern in mind, Green Energy is giving more importance to Mining.

Proof of Stake (PoS): Advantages and Disadvantages

In proof of stake consensus mechanism Staking makes it easier for you to run a node. It doesn’t require huge investments in hardware or energy, and if you don’t have enough token or coin to stake, you can join staking pools.

This is facilitated by the minimal hardware and energy requirements to participate in most proof of stake cryptocurrency blockchains

However, most proof of stake cryptocurrency blockchains have high thresholds when it comes to the minimum stake you need to put down to connect to it as an independent computer

Moreover, most proof of stake cryptocurrencies had something called a premine which is where a bunch of coins or tokens are minted in advance and distributed to the team and large investors

Consequently, most proof of stake cryptocurrencies are more centralized than Bitcoin and Ethereum since the average user is stuck delegating to a validator or staking pool belonging to the team and VCs.


At a high level, proof-of-stake has the same end goal as proof-of-work: to help the decentralized network (blockchain) reach consensus, securely. But it has some differences in process and personnel.

PoS switches out the importance of computational power for stake.
PoS replaces miners with validators. Validators stake their cryptocurrency to activate the ability to create new blocks. Validators don’t compete to create blocks, instead they are chosen at random by an algorithm.

Both Consensus mechanism has their own advantage and disadvantage. World’s top 2 cryptocurrency Bitcoin, Ethereum and few other using proof of work consensus mechanism
To secure decentralization and security. Although due to environmental and energy issue ethereum upgrade their consensus mechanism into proof of stake. Unlike ethereum most of the recently launched cryptocurrency using proof of stake consensus mechanism over proof of work.

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