When talking about Proof of Work (PoW) and Proof of Stake (PoS), it is a high-level software algorithms used in cryptocurrency platforms to reach consensus (validation) on blockchain networks. Before explaining how PoS and PoW actually work, let’s briefly cover a related and very important concept in the blockchain realm.

Mining refers to the process of verifying transactions on a blockchain and then adding the validations to a ledger or record within the block. Mining is an important process because it helps create more cryptocurrencies, such as Bitcoin (BTC). In addition, it allows miners to earn rewards for their work. With Bitcoin, coins enter circulation as miners continue to process transactions on their network.

Now, having explained what mining consists of, we can get into the matter by identifying the consensus for these transactions to be validated.

Proof of Work (PoW)

As its name implies, Proof of Work (PoW) refers to the work done by processing equipment (hardware) to validate transactions on a cryptocurrency platform. This method is used to validate and confirm the authenticity of the string.

In the blockchain, it is necessary to validate and confirm transactions, which leads to a reward for the miner who does the validation. However, one of the main problems faced by miners is the costs associated with electricity consumption. This is one of the main reasons why many cryptocurrency miners have mining farms in countries with lower costs. Therefore, it is what makes the world of mining relatively exclusive and small.

Proof of Work (PoW) Features

• It requires a lot of electricity.
• It usually requires a lot of computing power hardware.
• Mining more coins become difficult as the math difficulty increases, so the miners’ reward decreases.

Proof of Stake (PoS)

In this method, to validate and confirm transactions on the blockchain, validators -equivalent to miners in the PoW system- are selected based on the amount of cryptocurrency they have and how much time has passed since they obtained it.

The coins held by a validator show how committed the validator is. The time that has passed since a validator has been holding your coins can be referred to as the expiration date. A person with larger amounts of coins over a long time will have a better chance of validating a block.

One of the biggest things is that in Proof of Stake (PoS), potentially more people have the opportunity to become a miner, and some consider it more decentralized compared to Proof of Work (PoW).

Proof of Stake (PoS) Features

• It is not necessary for validators to invest in hardware, just a computer with access to the internet.
• Potentially anyone who owns coins can be a validator.
• Validations are quick and determined by the amount of time the person holds the coins.

Similarities and Differences between PoW and PoS

As mentioned above, both the Proof of Work (PoW) and Proof of Stake (PoS) are algorithms used to achieve consensus on the blockchain. Additionally, we can highlight the following:

• The end goal of both processes is exactly the same, but the method of achieving it is completely different.
• Both help validates and verifies blockchain-based transactions.
• PoW makes use of miners, while PoS uses validators.
• In PoW, complex mathematical algorithms are used to validate a blockchain, while in PoS, a validator is chosen deterministically.
• In PoS, the validator gets the transaction fees as a reward, which is done by opening your wallet. In PoW, the miner works hard to get his reward.

Conclusion

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