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POW VS POS
101blockchains.com
KEY DIFFERENCES
What is Proof
of Work?
Proof of Work is a type of
consensus mechanism. Here,
users (a.k.a. miners) use their
computational devices to solve
complex mathematical problems
in order to verify and add blocks
to the ledger system.
It needs heavy computational
power to function properly.
Miners solve complex mathematical problems. After
that new block gets created and the transaction is
confirmed.
Depends on the number of users available on the
network, overall load of the network and minimum
current power.
Each block will contain a new hash function and the
hash function of the previous block.
Working Principles of Proof of Work
Proof of Work consensus offers a high level of
security compared to other consensus mechanisms.
It can establish a true decentralized network and
offers a transparent transaction verifying process for
every user.
This process also offers a reward system for the users
participating in the mining process.
Advantages of Proof of Work
It does not offer efficiency. The process is slow and
can amount to high expensive fees.
It needs a massive amount of energy to function,
which is not an environmentally friendly process.
The mining process damages hardware; therefore,
miners have to invest in expensive equipment. It’s
vulnerable to 51% attack.
Issues with Proof of Work
Consensus Algorithm
What Is Proof
of Stake?
Proof of Stake is a consensus
mechanism that addresses the
issues of Proof of Work and offers
a better solution.
Here, users will need to stake
their coins in order to participate
in the verification process. This
one does not need
computational resources like
PoW.
In Proof of Stake, users have to be qualified to take
participate in the verification process. To qualify one needs
to store a certain amount of coin in their wallets.
Once you are qualified, you will need to deposit or stake an
amount of coin to take part in the voting system. This voting
system will choose the validators.
The more you stake the more you can mine or validate a
new block.
How Does It Work?
Proof of Stake is a highly efficient consensus protocol
as it does not need heavy computational power to
function.
It can offer inexpensive transaction processing fees
and can also verify and process a transaction faster.
It does not need any special hardware or equipment
to function.
Advantages of Proof of Stake
The process is not as robust or secured compared to
Proof of Work.
It can promote unfairness as validators with larger
coins at stake can influence the transaction
verifications.
In some cases, users may have to lock up their staked
coins for an amount of time.
Issues with Proof of Stake
Consensus Algorithm
PoW
Verification Mechanism
Incentive Policy
Vulnerability
Motivation
Requirement
Mining
Transaction fees + new coins
51% attack
Profit
Hash Power/Computational
Power
Validators
Transaction fees
Nothing at stake
Loyalty
Number of coins owned
Key Differences between PoW and PoS
Scalability
Main Issues
Low
Energy Inefficient
High
Wealth concentration
PoS
Verification
Mechanism
In PoW, the verification process is
called mining. Here, miners have
to verify the block by solving
complex mathematical problems.
In PoS, validators have to stake
their coins in order to take part in
the verification process. The more
users stake, the more they can
verify.
Incentive
Policy
In PoW, the users will need to pay
a transaction fee to the miners as
an incentive in order to get their
transactions verified. However, this
mechanism also rewards miners
with new native coins.
In PoS, the users will need to pay a
small transaction fee to the
validators for validating their
blocks. Here, the validators will
only get the network fee or
transaction fee as an incentive.
Vulnerability
In PoW, the network is vulnerable
to 51% attack. Therefore, if an
entity or organization owns 51% of
the computational power available
on the network, they can
manipulate the network as they
want.
In PoS, if no users are staking their
coins in the network, no
transactions will get validated. So,
the transaction processing will
stop indefinitely.
Motivation
PoW motivated users to become
miners by offering them profits.
Without the extra reward points, no
one would take part in the validation
process.
PoS does not offer users anything
extra like PoW to motivate them in
becoming validators. The system
runs on the factor of loyalty. PoS
requires users to be loyal to the
network and take part according to
their own accord.
Requirement PoW requires a lot of
computational power or hash
power to function. However, this
process is extremely costly and is
affecting the environment
negatively.
PoS requires users to own a certain
number of coins in order to be
eligible. The more coins users own
the better their chances.
Scalability PoW can become extremely slow
when there are many users on the
network. Therefore, it has a low
scalability problem.
PoS is a much faster process even if
there are many users on the
network. It can offer high
scalability.
Main Issues PoW can’t use energy efficiently. It
needs a massive amount of energy
to function, which is not an
environmentally friendly process.
PoS can become unfair if a few
users have a high wealth
concentration than others. Using
that, those uses can dominate the
verification process.
Learn More About PoW and PoS
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PoW vs. PoS - Key Differences

  • 2. What is Proof of Work? Proof of Work is a type of consensus mechanism. Here, users (a.k.a. miners) use their computational devices to solve complex mathematical problems in order to verify and add blocks to the ledger system. It needs heavy computational power to function properly.
  • 3. Miners solve complex mathematical problems. After that new block gets created and the transaction is confirmed. Depends on the number of users available on the network, overall load of the network and minimum current power. Each block will contain a new hash function and the hash function of the previous block. Working Principles of Proof of Work
  • 4. Proof of Work consensus offers a high level of security compared to other consensus mechanisms. It can establish a true decentralized network and offers a transparent transaction verifying process for every user. This process also offers a reward system for the users participating in the mining process. Advantages of Proof of Work
  • 5. It does not offer efficiency. The process is slow and can amount to high expensive fees. It needs a massive amount of energy to function, which is not an environmentally friendly process. The mining process damages hardware; therefore, miners have to invest in expensive equipment. It’s vulnerable to 51% attack. Issues with Proof of Work Consensus Algorithm
  • 6. What Is Proof of Stake? Proof of Stake is a consensus mechanism that addresses the issues of Proof of Work and offers a better solution. Here, users will need to stake their coins in order to participate in the verification process. This one does not need computational resources like PoW.
  • 7. In Proof of Stake, users have to be qualified to take participate in the verification process. To qualify one needs to store a certain amount of coin in their wallets. Once you are qualified, you will need to deposit or stake an amount of coin to take part in the voting system. This voting system will choose the validators. The more you stake the more you can mine or validate a new block. How Does It Work?
  • 8. Proof of Stake is a highly efficient consensus protocol as it does not need heavy computational power to function. It can offer inexpensive transaction processing fees and can also verify and process a transaction faster. It does not need any special hardware or equipment to function. Advantages of Proof of Stake
  • 9. The process is not as robust or secured compared to Proof of Work. It can promote unfairness as validators with larger coins at stake can influence the transaction verifications. In some cases, users may have to lock up their staked coins for an amount of time. Issues with Proof of Stake Consensus Algorithm
  • 10. PoW Verification Mechanism Incentive Policy Vulnerability Motivation Requirement Mining Transaction fees + new coins 51% attack Profit Hash Power/Computational Power Validators Transaction fees Nothing at stake Loyalty Number of coins owned Key Differences between PoW and PoS Scalability Main Issues Low Energy Inefficient High Wealth concentration PoS
  • 11. Verification Mechanism In PoW, the verification process is called mining. Here, miners have to verify the block by solving complex mathematical problems. In PoS, validators have to stake their coins in order to take part in the verification process. The more users stake, the more they can verify.
  • 12. Incentive Policy In PoW, the users will need to pay a transaction fee to the miners as an incentive in order to get their transactions verified. However, this mechanism also rewards miners with new native coins. In PoS, the users will need to pay a small transaction fee to the validators for validating their blocks. Here, the validators will only get the network fee or transaction fee as an incentive.
  • 13. Vulnerability In PoW, the network is vulnerable to 51% attack. Therefore, if an entity or organization owns 51% of the computational power available on the network, they can manipulate the network as they want. In PoS, if no users are staking their coins in the network, no transactions will get validated. So, the transaction processing will stop indefinitely.
  • 14. Motivation PoW motivated users to become miners by offering them profits. Without the extra reward points, no one would take part in the validation process. PoS does not offer users anything extra like PoW to motivate them in becoming validators. The system runs on the factor of loyalty. PoS requires users to be loyal to the network and take part according to their own accord.
  • 15. Requirement PoW requires a lot of computational power or hash power to function. However, this process is extremely costly and is affecting the environment negatively. PoS requires users to own a certain number of coins in order to be eligible. The more coins users own the better their chances.
  • 16. Scalability PoW can become extremely slow when there are many users on the network. Therefore, it has a low scalability problem. PoS is a much faster process even if there are many users on the network. It can offer high scalability.
  • 17. Main Issues PoW can’t use energy efficiently. It needs a massive amount of energy to function, which is not an environmentally friendly process. PoS can become unfair if a few users have a high wealth concentration than others. Using that, those uses can dominate the verification process.
  • 18. Learn More About PoW and PoS Blockchain Like a Boss Masterclass https://academy.101blockchains.com/c ourses/blockchain-masterclass Getting Started with Bitcoin Technology https://academy.101blockchains.com/courses/g etting-started-with-bitcoin-technology
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