Consensus Mechanisms are a set of algorithmic rules for blockchain participants (miners, validators etc.) to confirm transactions and add new blocks to a blockchain.
This week, we will break down the 2 most well-known consensus mechanisms, Proof-of-Work (Bitcoin etc.) and Proof-of-Stake (Ethereum 2.0 etc.).
Proof of Work (commonly abbreviated to PoW) is a consensus algorithm used for preventing the 51% attack or double-spends. Cryptocurrency like Bitcoin is using the PoW consensus to confirm transactions and produce new blocks added to the chain.
With PoW, miners compete to complete transactions on the network in exchange for a reward for their speed and accuracy.
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Proof of stake (PoS) is a consensus algorithm under which randomly chosen validation nodes (validators) stake native tokens (staking) of the blockchain network to propose or attest new blocks to the current blockchain. A validator will receive rewards by successfully adding blocks to the blockchain.
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One of the most common approaches to answering the Proof of Stake vs. Proof of Work question is to compare the benefits and limitations of both these consensus protocols.
To help you understand the differences between Proof of Stake and Proof of Work better, we’ll be highlighting the dissimilarities. That includes the mining mechanism, transaction verifications, safety, and more.
📖You can learn more from here: “Proof of Stake vs. Proof of Work: Differences & Functions”.
