Proof of Stake vs Proof of Work

Welcome to our course on Proof of Stake (PoS) and Proof of Work (PoW).

These are the two different consensus algorithms used to secure and validate transactions on a blockchain network.

For example, PoW being used by the infamous Bitcoin, and PoS by Ethereum. Let’s break down exactly what the differences are between them and why projects choose one or the other! →

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Proof of Work

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Proof of Work is a consensus algorithm that strengthens a blockchain network’s security by finding solutions to challenging mathematical puzzles. The winner of the race among miners to find the answer gets the privilege of adding the following block of transactions to the blockchain and is rewarded with tokens or cryptocurrency. This reward encourages network participation from miners and aids in protecting the blockchain from attacks.

It takes a lot of computational power and energy to solve the mathematical problem that must be solved in PoW because it is designed to be computationally intensive. By preventing an attacker from controlling more than 50% of the computational power, this computational effort helps to ensure the security of the blockchain, for example, Bitcoin.

In cryptocurrency, PoW is widely used, particularly in the early stages of blockchain development. However, due to its drawbacks, such as its high energy consumption and scalability issues, alternative consensus algorithms, like Proof of Stake, have been created (PoS), learn more about it in the next chapter.

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Proof of Stake

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Proof of Stake, on the other hand, does not rely on miners solving mathematical problems to validate transactions. Instead, it uses a system of validators who put up a certain amount of cryptocurrency as collateral, known as a “stake,” in order to participate in the validation process.

The validator who is chosen to add the next block to the blockchain is chosen at random, but the chances of being chosen are proportional to the size of the stake and delegation. This means that validators with a larger stake have a higher probability of being chosen.

One of the main advantages of PoS over PoW is that it is more energy- efficient. In PoW, miners use a lot of computational power, which requires a lot of energy. With PoS, validators only need to keep their computer running in order to participate in the validation process, which requires much less energy.

PoS also has the potential to be more secure than PoW. In PoW, if a miner or group of miners control more than 51% of the computational power on the network, they could potentially manipulate the blockchain.

With PoS, if a validator or group of validators control more than 51% of the tokens staked on the network first of all that would be very expensive and if they misbehave, all the tokens gonna lose their value, meaning they don’t have any interest doing that and even they would still only have a proportionate chance of validating the next block, and would not be able to manipulate the blockchain.

An important thing to note is that there is another form of Proof of Stake. The currencies that users staked in the PoS system would be used as a measure to choose validators. On the other hand, the DPoS method chooses block producers through a participatory procedure. Delegated Proof of Stake provides greater scaling with fewer block producers.

KYVE, for example, opens up its network to all, using Delegated Proof of Stake.

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• Find a word marked with * that you’re not too familiar with? Visit the KYVE Glossary to get caught up on its definition.

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KYVE Blockchain

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In conclusion, PoW and PoS are two different consensus algorithms that are used to secure and validate transactions on a blockchain network. PoW relies on miners solving complex mathematical problems, while PoS uses a system of validators who put up a certain amount of cryptocurrency as collateral. PoS is more energy-efficient and has the potential to be more secure than PoW.

Now, where does KYVE’s blockchain stand? Both KYVE’s chain and protocol layers use the DPoS consensus mechanism in order to maintain a healthy, secure, decentralized blockchain!

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• Want to learn more about KYVE? Be sure to take the KYVE Fundamentals Level 1 course!

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Conclusion

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Congratulations! You made it through the PoS vs PoW course!

To claim your earned 50 XP, enter the code below on KYVE’s Crew3 platform

Want to learn more? Feel free to check these resources:

• Visit KYVE Docs to learn more about the KYVE Blockchain.
• Always DYOR before taking action in supporting a Web3 project!
• Run into any terms marked with * that you’re not aware of? Visit the KYVE Glossary to learn what they mean!