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What is this? Advantages of Proof of Work (PoW) over its – IndiaBlogger.in

Consensus algorithms are a fundamental and essential component of blockchain networks. The peers of a blockchain network use these mechanisms to reach a consensus on the current state of the distributed ledger and, hence, the name consensus algorithm.

In addition, these algorithms bring many other benefits such as participant commitment verification, leader designation and data synchronization.

Consensus algorithms provide security and reliability to a blockchain, which are two key features of the network.

They weed out fraudulent and fraudulent participants from the network by reaffirming their commitment in terms of energy or finance. They also designate the nodes responsible for helping to chain and maintain the following blocks of transactions blockchain efficiently.

However, this does not mean that all is well with these consensus processes. They have their own set of trade-offs such as allowing for centralization, high power consumption and inequality.

There are different types of consensus algorithms such as proof of work, proof of stake, practical Byzantine fault tolerance (PBFT), proof of burn, etc.

In this article, we’ll discuss two of the most popular consensus algorithms, Proof of Stake (PoS) and Proof of Work (PoW), and look at why larger platforms, such as EthereumShifting from PoW to PoS algorithm.

We will see how PoS provides better security, reliability, efficiency and speed, but more importantly, how it solves two main problems. Issues that affect proof of work, ie high power consumption and centralization.

What is Proof of Stake (PoS)?

The Proof of Stake mechanism works on the economic stake of the validators on the network. Therefore, first of all, validators have to invest in the blockchain’s base cryptocurrency. Then, they have to close some of their currency as bets. Once the bet is placed, the process of proposal and voting for the next block begins.

Verifiers calculate and propose a block that they consider canonical and fit as the next block in the chain according to their calculations. Blocks that meet all the guidelines are then added to the chain and the validators of the block are rewarded.

There are different forms of PoS in which rewards are given to validators. However, two major ones are discussed below.

  1. Proof of chain based stake – In this algorithm, one validator is chosen at pseudo-random during each time slot. The validator has the right to create a block that essentially points to the previous block to form a single growing chain.
  2. BFT-Style Proof of Stake – Here, BFT stands for Byzantine Fault Tolerance, In this flavor of PoS, validators are granted the right to randomly propose blocks. However, consensus on valid blocks is achieved through a multi-round process. In this process, validators vote for a specific block in each round. and finally agree that the given block is valid and must be part of the chain, Specifically, the weight of each validator’s vote corresponds to the size of his stake.

PoS is a great alternative to existing algorithms and encourages validators to achieve consensus. It offers significant benefits such as security, low risk of centralization and energy efficiency. Let us discuss the advantages in detail.

Benefits of proof of stake

  • energy efficient

    According to the Cambridge Center for Alternative Finance (CCAF), Bitcoin (which follows PoW) consumes about 110 terawatt hours per year which is roughly equal to the energy consumption by Sweden., Questions are being raised about the high energy consumption by blockchain, especially using PoW.

    However, PoS is much more energy-efficient and uses a fraction of the energy required by other algorithms. This is because heavy machinery is not required to solve complex puzzles in the case of PoW. About this in a later section.

  • maintain a rarity

    Since PoS simplifies verification and mining on resource consumption, there is no need for a highly rewarding system to encourage continued participation by validators. In addition, it also creates room for the reward to decrease over time, reducing the cryptocurrency’s supply.

  • discourage centralization

    PoS facilitates the use of mathematical models for egalitarian operations and discourages centralization of the system. This prevents the formation of cartels, in the rare event that they still form, it stops them from acting in harmful ways.

    It also reduces the risk of centralization by offering linear scalability and removes any disproportionate advantages such as better affordability of mass production equipment such as PoW.

  • Leave the 51% Attack Unnecessary

    PoS has the potential to impose monetary penalties for various forms 51% Attacks, This makes such attacks much more expensive than PoW, thereby removing or minimizing any advantage that attackers feel.

What is Proof of Work (PoW)?

Proof-of-work consensus algorithms require network participants or miners to compete against each other. They have to solve extremely difficult puzzles requiring extremely complex calculations.

The first person to solve the puzzle gets the right to create and broadcast a new block on the network. Then, other nodes personally audit the block and if the block conforms to all standards and guidelines, it is added to the existing blockchain. In this case, electrical energy, the creator or block is rewarded with cryptocurrency for using its resources.

The process is called mining and the participants are called miners. This is because the energy and resources needed to complete the process can be considered the digital equivalent of mining precious metals in the real world.

Benefits of proof of work

  • encourages renewable energy

    High energy consumption forces participants to look for cheap and efficient renewable resources of energy to reduce the high cost of production.

    In addition, PoW inherently rewards overall efficiency i.e. higher energy efficiency and better technical performance. Leading to a healthy competition in both the aspects.

    It has also exploited it for the exploration and mining of trapped energy.

  • high security

    This mechanism requires high initial hardware cost and recurring resource expenditure, thus, is difficult and costly to attack. This can be compared to proof-of-stake, where a small upfront expense is enough to participate.

Proof of Stake vs Proof of Work: Pros and Cons

proof of stake proof of work
participants

They are called validators because they mainly validate their crypto by staking them to add blocks to the blockchain. They are chosen at random for the right to propose a block.

They are called miners because they have to use vast resources to solve a puzzle and get the right to create and circulate blocks.
resources required Verifiers must have coins or tokens to place bets. Miners must be able to invest high resources in order to participate.
cost Low cost in terms of infrastructure. But miners have to invest in the base coin of the blockchain. High cost of necessary infrastructure and recurring cost of energy resources.
professionals – low cost of equipment
– energy efficient.
– high speed
– high scalability
– Discourages centralization and 51% attack
– Higher cost of equipment to discourage attacks, thus, higher security.
– Rewards the use of efficient resources such as energy, infrastructure and technology
Shortcoming – Comparatively new, not as proven in terms of safety as proof of work.
– Network control can be purchased
– Requires huge amount of energy
– High cost of participation
– prone to centralization

questions to ask

What is Byzantine fault tolerance?

It is not easy to reach consensus securely and efficiently on a distributed network as some nodes may fail to participate or act dishonestly. The only way to achieve consensus is to have at least two-thirds or more of the trusted and honest network nodes. Therefore, a mechanism has been put in place so that the system works even if not all nodes are participating in the voting process.

Byzantine fault tolerance (BFT) is a systematic ability to resist a class of failures derived from the problem of Byzantine generals i.e. agree on a common solution for coordination, whether yes or no. There is no right answer, all that matters is that all participating nodes must have the same answer. A BFT system continues to function successfully even if some nodes fail or act maliciously.

What is a 51% attack?

A 51% attack is a potential breach on a blockchain network, where an entity or organization owns most of the computational power and uses this power to cause network disruption. In such a scenario, they can

– Deliberately exclude or modify the order of transactions.
– Reverse transactions to create double spending problem.
– Prevent some or all transactions from being confirmed
– Block some or all other miners from mining for a mining monopoly
– Reverse transactions from other users
– Prevent transactions from being created and transmitted over the network.
– Change the reward of blocks,
– Fake crypto coins
– stealing coins

Is bitcoin based on proof of stake?

No, bitcoin uses proof of work in which miners direct their effort to solve a complex mathematical puzzle to validate transactions and, in return, earn bitcoins. Proof of work is widely used in mining cryptocurrencies. Transactions are processed peer-to-peer in a secure manner without the need to rely on any third parties.



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