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Author Topic: Proof of Work and Proof of Stake any difference?  (Read 61 times)
Utoy101
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July 14, 2018, 05:50:16 AM
Merited by mdayonliner (1), AdoboCandies (1)
 #1

PROOF OF WORK (POW)
-requires proof that work of some kind occurred. In the case of Bitcoin miners are required to do this work before any of their blocks is accepted by others.
-PoW is a protocol designed primarily to prevent and deter cyber-attacks on the network (in fact, it has an exorbitant cost to try to make attacks, much more than what someone would earn from that), and it also allows a distributed consensus of “trustless” transactions.
-PoW is needed to solve exceptionally difficult math problems, a process called Mining, which is used to write a new trustless transaction group in the blockchain.
-Proof Of Work is a requirement to define an expensive computer calculation, also called mining, that needs to be performed in order to create a new group of trust less transactions (the so-called block) on a distributed ledger called blockchain.
-POW is the most primitive incentive system in the blockchain. Literally, the amount of reward is measured by the amount of work and contribution of the miners. In fact, it depends on the size of computing power.

ADVANTAGES
  • Complete decentralization
  • Nodes are free to come in and out and are easy to implement
  • The cost of destroying the system is huge
  • protection from Ddos-attacks and the influence of low fractions of cryptocurrencies owned by the miner in extracting capacity.
  • Proof-of-work imposes certain restrictions on the actions of the participants, because the task requires considerable effort. Effective attack also requires a high computing capacity and a long calculation, so it is possible, but disadvantageous against the background of high costs.
  • No matter how much money you have in your wallet — it is important to have greater computing capabilities to solve problems and form new blocks, which means that holders of large capital can not make decisions for the entire network.

DISADVANTAGES
  • High demand on node performance network environment
  • Unable to achieve final consistency
  • Waste energy
  • The main problems: huge costs, "useless" calculations and "attack 51%".
  • For complex calculations require specialized and expensive computer hardware. Expenses grow unmanageable, and mining becomes possible only for large groups of miners. In addition, specialized computers consume a lot of energy, which increases costs. The consequence of this is a gradual increase in the centralization of the system, as it is beneficial. And this is what happens in the case of bitcoin.
  • Miners perform work on the creation of blocks, simultaneously consuming a huge amount of energy, the calculations that they do, are completely useless in themselves. Yes, they guarantee online safety, but their results cannot be used in business or science.

PROOF OF STAKE (POS)
-Proof-of-Stake is executed by miners who put a number of their coins on a block to check transaction blocks.
-requires users that have a high stake at the currency (i.e. hold a lot of coins) to determine the next block. This has a high risk of some party achieving monopoly of the currency but there are several methods to prevent that (by allocating random stakeholders to agree on a new block, and others).

- is a different way to validate transactions based and achieve the distributed consensus.
It is still an algorithm, and the purpose is the same of the proof of work, but the process to reach the goal is quite different.
Proof of stake first idea was suggested on the bitcointalk forum back in 2011, but the first digital currency to use this method was Peercoin in 2012, together with ShadowCash, Nxt, BlackCoin, NuShares/NuBits, Qora and Nav Coin.
Unlike the proof-of-Work, where the algorithm rewards miners who solve mathematical problems with the goal of validating transactions and creating new blocks, with the proof of stake, the creator of a new block is chosen in a deterministic way, depending on its wealth, also defined as stake.
No block reward.Also, all the digital currencies are previously created in the beginning, and their number never changes.This means that in the PoS system there is no block reward, so, the miners take the transaction fees.This is why, in fact, in this PoS system miners are called forgers, instead.

-POS does not require judging the power and contribution, but decided by equity. The "equity" here can also be understood as tokens, that is, miners with more tokens will get more rewards.
-is a method of securing a cryptocurrency network through requesting users to show ownership of a certain amount of currency.

ADVANTAGES
  • Low requirement on node performance and short time to reach consensus
  • No final consistency
  • Proof of Stake currencies can be more energy efficient than Proof of Work, which mainly relies on energy use.
  • The incentives of the block-generator are also different. Under Proof-of-Work, the generator may potentially own none of the currency they are mining. The incentive of the miner is only to maximize their own profits. It is unclear whether this disparity lowers or raises security risks. In Proof-of-Stake, those "guarding" the coins are always those who own the coins (although several cryptocurrencies do allow or enforce lending the staking power to other nodes).

DISADVANTAGES
  • The longer a miner holds a token, the greater the age of the token (the age of tokens= the amount of tokens x the holding days of the token) , and thus the greater the reward. In this way, the rich miners will become richer and richer, like a snowball.
  • So the problem with POS is the gap between the rich and the poor, that is, it represents the interests of the rich miners, and equity is everything.

CREDITS: AdoboCandies
https://bitcointalk.org/index.php?topic=4613620.0



SOURCES:
https://en.bitcoinwiki.org/wiki/Proof-of-work
https://bitcoin.stackexchange.com/questions/43467/whats-the-difference-between-pow-and-pos
https://medium.com/novamining/main-differences-between-pow-and-pos-cryptocurrency-mining-c4cc279d9739
http://www.cryptocurrencycare.com/difference-between-pow-pos/
https://www.quora.com/Can-you-explain-easily-the-difference-between-PoS-and-PoW-in-blockchain-in-one-sentence
https://coincentral.com/making-sense-of-proof-of-work-vs-proof-of-stake/

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