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April 25, 2018, 05:26:16 PM |
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Proof of Work
Advantages of PoW:
- Impact of external factors. With the PoW mechanism, the production and circulation of money requires external factors such as energy and hardware. You can not recover the energy or output of the hardware. Why is this important to be explained in the Proof of Stake section below.
- Quite simply for minning. You only need to get the hash functions that other computers have computed, combine them into a large hash function, from which many computers havehes together and divides the profits.
- PoW is very useful for areas with surplus electricity, such as China with hydroelectric dams.
Disadvantages of PoW:
- PoW can not be used on small and weak devices such as smartphones. These devices not only lack the space to store hundreds of gigabytes of blockchain data but they also do not have enough computing power to dig effectively. Phone battery will run out very fast but not really accomplish anything.
- PoW is very slow. With Bitcoin every 10 minutes a block, and only transactions in that block are processed. Everything else must wait for the next block. The consequences are long waiting times or expensive transaction fees (higher transaction costs are processed faster).
- PoW is consuming a huge amount of electricity. Only one single block has consumed more electricity than the needs of some countries for a whole year. This will only get worse. The dependence of pre-coding on electricity is unsustainable in most stable environments. This dependency also means that higher electricity bills or government-imposed limits on types of electricity can "kill" an entire digital currency.
- PoW allows centralized digging. China accounts for 80% of the world's Bitcoin hash capacity, and if they coordinate cartels (voluntary organizations affiliated in a consensual manner to dominate economic power) into the common resource We have seen 80% attack, not 51% attack (blockchain attack by digger group controls more than 50% of network exploit power).
- Because the block bonus continues to decrease, miners get less tokens from a blocked blockchain. At the same time, the more people involved in digging, the more difficult it will be, so it will be harder to dig. This makes digging more expensive than making people leave the system. The crypto itself destroys itself. The low shear capacity of the digging community also increased the likelihood of 51% attack.
Proof of Stake
Advantages of PoS:
- Handle transactions quickly.
- In contrast to PoW, PoS does not harm the environment.
- Not easy to be attacked by government: no need for huge amounts of electricity.
- Can be implemented on smaller and weaker devices because there is no need to download the entire blockchain, and because it does not require a lot of computing power, it can easily be accepted massively.
Disadvantages of PoS:
- No external factors. Because shares are part of the system itself, the whole game is internal. That means someone with enough money to invest exclusively to destroy the system can do so by investing only in money; In contrast to Bitcoin, where they need to invest money, time, expertise, hardware, power and more - all external factors.
- The rich are richer. Those who have the longest ether (the age of an Ether in an account also plays the role of a quantum number) also have the greatest chance of becoming a validator. That means that the opportunity to earn more aether on their current wealth is also increased. It is different from Bitcoin's "richer and richer" system because rich people must continue to invest in hardware and knowledge to stay competitive. They also suffer more if they damage the network.
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