Proof-Of Work vs. Proof-of-stake: The Best For Scaling Blockchains

Proof-Of Work vs. Proof-of-stake: The Best For Scaling Blockchains

Proof-of-Work vs. Proof-of-Stake

If you want to know more about Proof-of-Work vs. Proof-of-Stake, this post offers great insight. Between proof-of-work and proof-of-stake, which one is the best for scaling blockchain systems? We will answer this question and more in this article. Over the years, scaling has been a big issue for cryptocurrency transactions. In the cryptocurrency world, network validation often comes in two forms; proof-of-stake or proof-of-stake. Although there are many others, these two are very common and power the popular blockchain systems.

Also Read: How to Store Your Bitcoin and Keep it Safe

These two processes solve the problem of “verifying transaction” but with different approaches. Both approaches offer different solutions to the problem of cryptocurrency scaling. Does one process have an advantage over the other, or are they just different ways of doing the same thing?

Both of these cryptocurrency transaction validation processes are called consensus mechanisms. They are required to confirm transactions that take place on the blockchain without the need for an intermediary. By the end of this article on Proof-of-work VS Proof-of-Stake, you will perfectly understand each of these consensus mechanisms. We will start with the basics of each model and how one differs from the other.

The Basics of Proof-of-Work vs. Proof-of-Stake

In his bid to develop the first cryptocurrency, Bitcoin, Satoshi Nakamoto has to find a way to verify transactions without intermediaries. He achieved it when he created the Proof-of-Work consensus mechanism. The essence of the Proof-of-work system is to determine how blockchain reaches consensus.

Proof-of-Work system is based on an advanced form of mathematics known as cryptography. It is on this basis that digital coins like Bitcoin, Ethereum, Litecoin, etc. are called cryptocurrencies. Cryptography uses advanced mathematics that only powerful computers can solve. No two of these mathematical equations are ever the same. This means that once the problem is solved, the network knows that the transaction is genuine and authentic.

Many blockchain systems copied the original Bitcoin code; hence they also use the Proof-of-Work consensus model. Although the Proof-of-Work consensus protocol is great, it has its shortcomings. It needs a significant amount of electricity, and it also has a limited number of transactions per second. These shortfalls of Proof-of-Work lead to the creation of other consensus mechanisms. One of these consensus mechanisms created to solve the problem of Proof-of-Work is the Proof-of-Stake consensus mechanism.

Scott Nadal and Sunny King both developed the Proof-of-Stake model in 2012. At the time of the launch, both developers argued that the Proof-of-Work model of Bitcoin requires the equivalent of $150,000 daily electricity cost. Interestingly, the figure has increased to millions of dollars currently. Peercoin was the first blockchain project to adopt the Proof-o-Stake consensus mechanism. The initial benefits were an equal mining system, better scalable transactions, and less reliance on electricity.

Now that you have known the basics of Proof-of-Work VS Proof-of-Stake, we go further to explore the adoption of these consensus mechanisms.

The Adoption of Proof-of-Work VS Proof-of-Stake

Bitcoin blockchain was the first to adopt the Proof-of-Work (PoW) consensus protocol. The PoW network takes about ten minutes to confirm a transaction and can handle about 7 transactions per second. This has increased the transaction fees from the time the project started in 2009. The initial Bitcoin transaction fee was a fraction of a cent. However, during the busiest period of December 2017, the fee increased to $40 per transaction.

Although Bitcoin transaction fees have been reduced, they are still too high to serve as a suitable global payment system. The limitations of the Prof-of-Work consensus mechanism is the precursor of these issues. Ethereum is the second most popular cryptocurrency, and like Bitcoin, it uses a Proof-of-Work consensus mechanism. However, the developers of Ethereum made a few changes to the original code. These changes enabled the network to process transactions in about 16 seconds. Although this is not the fastest in the crypto space, it is far better than the 10 minutes it takes Bitcoin.

Also Related: What is Lightning Network and how does it work?

Meanwhile, the scalability issues of Proof-of-Work haven’t been solved. The Ethereum blockchain processes a maximum of 15 transactions in a second. This is substantially lower than what the network needs. Ethereum’s Proof-of-Stake launch date isn’t yet official, but it has the potential to increase the number of transactions to thousands per second. Other blockchains like Bitcoin Cash and Litecoin have also installed the Proof-of-Work consensus mechanism. Meanwhile, cryptocurrencies like Dash use the Proof-of-Stake model, which allows them to send and receive funds in seconds.

NEO is another popular blockchain that uses the Proof-of-Stake model, and it has had a great journey since it was launched in 2016. The adoption of the Proof-of-Stake model by NEO increased its value to more than 100,000%.

Proof-of-Work VS Proof-of-Stake Energy Consumption 

When we talk about Proof-of-Work VS Proof-of-Stake, one of the major discussion points is the energy consumption difference. In Proof-of-Stake (PoS), energy consumption is minimal compared to Proof-of-Work (PoW). In PoW, miners have to solve complex mathematical puzzles that are computationally intensive. It means that their hardware uses lots of electrical power to solve these computational problems.

On the other hand, PoS depend on little electrical power to run. Considering the bright future of cryptocurrency, PoS will be good for the environment. It means that the more we use PoW, the energy consumption will also grow.

The Security of Proof-of-Work VS Proof-of-Stake

In more than one decade of Bitcoin’s existence, Proof-of-Work is yet to fail. It has shown its resilience over the years. Meanwhile, PoS is undoubtedly a great idea, but it isn’t yet tested like PoW. This is not good, especially when peoples’ money is on the line.

Another big security worry for Proof-of-Stake is the outcome of cases of disagreement between members of the community. When blockchain splits or forks result from a disagreement between community members, PoW miners will have to decide where to direct their mining power. They will have to choose between the newly forked blockchain or the original blockchain.

For these PoW miners, splitting their mining power is uneconomical as it will reduce their chances of mining crypto on either of the two chains. This will discourage constant forking by users who want to go after newly created money to the detriment of the network’s integrity.

On the other hand, Proof-of-Stake allows validators to validate the transactions f both chains resulting from a fork. Validators can do this without consequences since PoS doesn’t take additional resources like mining power. It means that users can create multiple forked cryptos using the PoS consensus mechanism. Users can “double spend” crypto or even spend the same unit of cryptocurrency twice.

They can do this by spending it on one blockchain and then forking or splitting from the old blockchain to create a new one where the spending transaction does not exist. However, solutions like lashing or confiscating of stake for bad behavior have been proposed to tackle the “nothing at stake” problem.

In the case of a malicious attack like the 51% attack, Proof-of-Stake may be more secure than PoW. It will be more expensive for attackers to execute the 51% attack on PoS. Meanwhile, an attacker will have to buy lots of mining equipment before attacking the PoW system, and it will be expensive. However, it will be more expensive to buy 51% of a PoS crypto’s outstanding currency. The reason is that buying that much will drastically increase the price as a purchase is being made. Every purchase pushes the price higher and higher. Also, buying that amount of crypto from different parties will be close to impossible.


Some people have the opinion that one of these consensus mechanisms is better than the other. However, it is difficult to reach a consensus for Proof-of-Work VS Poof-of-Stake. PoS may seem to be the better one when we look at energy consumption. Meanwhile, PoW has been in use for more than a decade, unlike PoS.

On the other hand, there might be other advantages and disadvantages of these two consensus mechanisms that we are yet to think about. At the moment, it will be safe to say that Proof-of-Stake is another interesting development in the rapidly evolving blockchain space. With time, we will see where it leads and its impact on the broader blockchain ecosystem.




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