Cryptocurrency growth: Understanding the two main consensus mechanisms

The world of cryptocurrency has exploded in recent years, new coins and chips being launched every day. As a result, there are several different consensus mechanisms that supply these digital currencies, each with their own strengths and weaknesses. In this article, we will deepen in the most popular two consensus mechanisms: the evidence of work (POW) and the proof of the stake (POS).

Proof of work (POW)

The proof of work is one of the earliest and most useful consensus algorithms in cryptocurrency. It was around the Bitcoin protocol for the first time in 2009.

How works works

In the POW, the miners compete to solve complex mathematical puzzles, which involves:

• Hash function: Miners must find a hash that meets certain criteria.

• Creating the block

  : The miner finding a solution gets to add a new blockchain transaction block and broadcast it on the network.

• Verification : Other knots in the network check the block by solving the puzzle alone.

Benefits

Pow offers multiple benefits:

Energy efficiency : Pow requires relatively low energy expenses, which makes it more environmentally friendly than other consensus mechanisms.

Security : The random nature of the puzzles makes an attacker difficult to predict the result and launch a 51% attack on the network.

* Speed ​​: The POW blocks are generated and checked at a faster pace than POS.

Disadvantages

Pow also has some disadvantages:

Energy consumption : Energy demand for cryptocurrency is significant, contributing to climate change and tightening of local electrical networks.

* Centralization : The need for strong hardware and high calculation resources can lead to centralizing mining operations.

* Vulnerabilities : Pow makes it difficult to launch a 51% attack on the network due to the random nature of the puzzles.

Proof of stake (POS)

The proof of the miseries is an alternative mechanism of consensus that gains popularity in recent years. It was first introduced by Vitalik Butterin, the creator of Ethereum, and has since been adopted by other cryptocurrencies such as Tezos and Cosmos.

How works works

In POS, the validators are chosen to create new blocks based on their network package, rather than to have computing power. The process involves:

• Package allocation : The validators are allocated a certain amount of cryptocurrency (stake) that they will have to hold for a long period.

• Random selection : A random list of validators is selected from the stake group.

• Creating the block : The validator chosen at random creates a new block and transmits it on the network.

Benefits

POS offers more advantages:

Energy efficiency : POS requires relatively low energy expenses, which makes it more environmentally friendly than POW.

Security : The random nature of the selection process makes it difficult to predict the result and launch a 51% attack on the network.

* Worse peace : POS generates blocks at a slower pace than POW.

Disadvantages

POS also has some disadvantages:

Centralization **: The need for validators with a significant stake can lead to the centralization of the network, because stronger people can accumulate more stake and influence.

* Scalability problems : POS is still in its early internships, which can make it less scalable than POW.

Comparison

| Mechanism of consensus | Energy consumption (kWh) block generation time (seconds)

| — | — | — |

| Pow | Low to moderate | Quick (10-30 seconds)

| Pos | Moderate (2-5 kWh/million) slow (1-3 minutes)

Conclusion

The choice between the proof of work and the proof of the stakes finally depends on the specific needs and objectives of your cryptocurrency project.