Proof of Work vs Proof of Stake: What's The Difference? 5/28/21, 5:07 AM " Coupons & Deals # Tutorials $ Review Process % About & Contact Proof of Work VS Proof of Stake: Which One Is Better? Proof of Work VS Proof of Stake: not sure what's the difference between the two? Learn what's the difference between Proof of Work VS Proof of Stake. See BEST-RATED Exchanges ! By Laura M. - Senior Editor ✓ Fact Checked Last Updated: May 19, 2021 Are you interested in the Proof of Work VS Proof of Stake https://www.bitdegree.org/crypto/tutorials/proof-of-work-vs-proof-of-stake Page 1 of 24 Proof of Work vs Proof of Stake: What's The Difference? 5/28/21, 5:07 AM argument? Or maybe you just want to know a little more about the process of how to mine Ethereum, Bitcoin, Dash and other popular blockchains that use Proof of Work? Either way, you've come to the right place. Both of these models are called 'consensus mechanisms', and they are a current requirement to confirm transactions that take place on a blockchain, without the need for a third party. We'll get more into this soon though. Anyway, in this Proof of Work VS Proof of Stake guide, I am going to start by explaining the basics of each model, followed by which popular blockchains have adopted them. Following that, I am then going to give a really simple explanation about how the technology works and how they allow people to earn extra cryptocurrency by becoming a miner! Finally, I will then explain why I believe Proof of Stake is a much better model than Proof of Work, as well as giving some real-world examples of each model. By the end of reading my guide from the start to finish, you will be able to comfortably explain to your friends what each consensus mechanism is, how they work and which one is better! NOTE! 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Read review So, what are you waiting for? Let's start with the basics. Table of Contents 1. Proof of Stake VS Proof of Work: The Basics 2. PoW Adoption VS PoS Adoption 3. Proof of Work: How are Transactions Verified? 4. Proof of Stake: How are Transactions Verified? 4.1. Centralization 4.2. Electricity Consumption 4.3. 51% Attack 5. Disadvantages of the Proof of Stake Model? 6. Proof of Work VS Proof of Stake: The Conclusion https://www.bitdegree.org/crypto/tutorials/proof-of-work-vs-proof-of-stake Page 3 of 24 Proof of Work vs Proof of Stake: What's The Difference? 5/28/21, 5:07 AM Proof of Stake VS Proof of Work: The Basics When Satoshi Nakamoto was building the first-ever cryptocurrency, Bitcoin, he had to find a way for transactions to be verified without the need to use a third party. This he achieved when he created the Proof of Work system. Latest Coinbase Coupon Found: ( Verified STAFF PICK GET UP TO $132 By Learning - Coinbase Holiday RATING Deal 5.0 $ $ $ $ $ This Coinbase Holiday Deal is special - you can now earn GET COUPON up to $132 by learning about crypto. You can both gain knowledge & earn money with Coinbase! ) Expiration date: 31/05/2021 % 3,928 People Used * Only 31 Left Essentially, Proof of Work is used to determine how the blockchain reaches consensus. In other words, how can the network be sure that the transaction is valid and that someone isn’t https://www.bitdegree.org/crypto/tutorials/proof-of-work-vs-proof-of-stake Page 4 of 24 Proof of Work vs Proof of Stake: What's The Difference? 5/28/21, 5:07 AM trying to do bad things, such as spend the same funds twice? Although I will explain it in more detail later on, Proof of Work is based on an advanced form of mathematics called 'cryptography'. This is why digital coins like Bitcoin and Ethereum and called 'cryptocurrencies'! Cryptography uses mathematical equations that are so difficult that only powerful computers can solve them. No equation is ever the same, meaning that once it is solved, the network knows that the transaction is authentic. Lots of other blockchains copied the original Bitcoin code and as such, also use the Proof of Work model. Although Proof of Work is an amazing invention, it is anything but perfect. Not only does it need significant amounts of electricity, but it is also very limited in the number of transactions it can process at the same time. TOP3 Recommended Crypto Exchanges: As a result, other consensus mechanisms have been created, with $ 9.8 Read review one of the most popular being the Proof of Stake model. Proof of Stake was first created in 2012 by two developers called Scott $ 9.6 Read review Nadal and Sunny King. At the time of its launch, the founders $ 9.4 Read review argued that Bitcoin and its Proof of Work model required the equivalent of $150,000 in daily electricity costs. How we review crypto Since then, this figure has increased to millions of dollars, which I exchanges will discuss in more detail further down this article. 1. Collect data based on user reviews. 2. Investigate the crypto exchanges online. 3. Usually, test the crypto exchanges Anyway, the first-ever blockchain project to use the Proof of ourselves. 4. Evaluate & rank online crypto exchanges. Stake model was Peercoin. The initial benefits include a fairer and 5. Publish crypto exchange reviews & guides. more equal mining system, more scalable transactions and less See BEST-RATED Exchanges reliance on electricity. As a result, the world’s second most popular cryptocurrency – Ethereum, is in the process of attempting to move from Proof of Work to Proof of Stake. The Ethereum Proof of Stake date is yet to https://www.bitdegree.org/crypto/tutorials/proof-of-work-vs-proof-of-stake Page 5 of 24 Proof of Work vs Proof of Stake: What's The Difference? 5/28/21, 5:07 AM be confirmed, however, the team is working hard to get there as quickly as possible. So, now that you know the basics, the next part of my 'Proof of Work VS Proof of Stake' guide is going to look at which blockchains have adopted each of the two models! PoW Adoption VS PoS Adoption The most obvious starting point is to discuss the original adopter of Proof of Work, which is the Bitcoin blockchain. Every time a transaction is sent, it takes about 10 minutes for the network to confirm it. Furthermore, the Bitcoin blockchain can only handle about 7 transactions per second. This has led to transaction fees increasing significantly from when the project first started in 2009. For example, Bitcoin fees initially cost a very small fraction of a cent, which made the network useful for transferring small amounts. However, as you will see from the chart below, this increased to as much as $40 per transaction during its busiest period in December 2017! Source: privacypros.io https://www.bitdegree.org/crypto/tutorials/proof-of-work-vs-proof-of-stake Page 6 of 24 Proof of Work vs Proof of Stake: What's The Difference? 5/28/21, 5:07 AM Although these fees have since been reduced, they are still too high to make it suitable as a global payment system. Most of these issues are mainly due to the limits of Proof of Work. The second most popular cryptocurrency in the world, Ethereum also uses Proof of Work. Interestingly, the developers made a few changes to the original code, which allowed the network to process transactions in just 16 seconds. Although this isn’t the fastest in the industry, it is significantly quicker than the 10 minutes it takes Bitcoin. Nevertheless, the scalability issues that Proof of Work has caused Bitcoin is also a problem for Ethereum. The maximum amount of transactions that the Ethereum blockchain can process is 15, which again, is substantially lower than the network needs. However, although the Ethereum Proof of Stake date isn’t yet official, it is hoped that it will increase this number to thousands per second. Just like Ethereum, other blockchains sometimes use a variation of Proof of Work by changing the type of algorithm which supports the transaction validation process. Other popular blockchains that have installed Proof of Work include Bitcoin Cash and Litecoin. Binance Deal Active Right Now: ( Verified STAFF PICK GET 20% OFF RATING Binance Holiday Sale 5.0 $ $ $ $ $ You can now save up to 20% off trading fees in this Binance Holiday Sale. Follow the link & save now while GET COUPON the offer is still valid! ) Expiration date: 31/05/2021 % 2,935 People Used * Only 67 Left https://www.bitdegree.org/crypto/tutorials/proof-of-work-vs-proof-of-stake Page 7 of 24 Proof of Work vs Proof of Stake: What's The Difference? 5/28/21, 5:07 AM On the other hand, some really popular cryptocurrencies now use Proof of Stake.