Yes, there are plenty of new words and terms, especially since blockchain technology came to the spotlight. Learning and memorizing some new expressions is easy, as we can all learn a definition of what Node is, but very few are actually going to understand it just by reading a sentence or two. Time and practice make it perfect, and this is even more emphasized for blockchain technology, as the only way to find out which blockchain network is the best is by doing some research. PoW and PoS are two terms that you probably already came across, but learning what each of these two terms actually means and what their differences are is a must in order to find out which one is the best. So, since the Proof-of-stake is the latter, let’s focus more on it and see what it has to offer.
Proof of stake – explained
It’s all about the consensus, and when we talk about blockchain proof of stake, we cannot explain it without mentioning it. The blockchain networks try to achieve distributed consensus, and the mechanism they use to do that is known as proof of stake, or shortly PoS. Do not worry, we will make it simpler in continuation. Proof of stake requires validators who make transactions and creates new blocks on the blockchain network, which allows all the nodes to agree on its state. When it comes to mining, the validator who owns more coins will have more mining power, and they have the chance to mine even more.
Difference between PoW and PoS
To get a better insight into which of these two concepts has more to offer, let’s make a comparison. In PoW, a miner who has the most hardware devices is the winner or gets awarded if you prefer, while in PoS, the winner is decided randomly, giving all the miners a much better chance for reward As for the transaction process and costs, PoS is much more efficient as it can handle more transactions, which also largely influences the fee. Namely, a new block is created for every transaction, and they all need to be independently verified. Now, this is where miners step in as their goal is to solve the cryptography of that new block, and the first one to solve it gets rewarded. As you can see, it is an unfair and complex system that’s just not sustainable for longer periods. Furthermore, as the number of these transactions grows, the waiting period to validate it gets longer, meaning that you can say bye-bye to the swift transactions. PoS work on an entirely different concept, and the only thing needed for you to participate is to create a new, specific wallet and place a certain number of coins into it. Another significant thing to mention is that as a reward, with PoS, you get a transaction fee.
Advantages of PoS
• Elite hardware is not crucial – We all know how difficult it can be to mine, especially if we do not have the proper equipment, which implies elite hardware that is worth a lot of money. Luckily, PoS allows us to create new blocks without expensive equipment, which means that we can mine even if we do not have money to buy it.
• More nodes – The thing with nodes is pretty simple, and the more nodes we have in the blockchain network, the fewer chances are that it can be centralized in the future. The PoS intention is literally that since it has a lot of nodes and the intention to stay decentralized forever.
• Safety – When it comes to potential attacks on the network, PoS is one of the safest mechanisms because of its structure and huge amount of nodes. This makes it practically useless for anyone to hack it because it will mean that they will also lose their stacked coins.