ZD Tech: Proof of Work vs. Proof of Stake, What’s the Difference in Blockchain?

Hello everyone and welcome to ZD Tech, the daily podcast from the editors of My name is Guillaume Serries and today I will explain to you difference between “proof of work” and “proof of stake” — between “proof of work” and “proof of stake” in English.

Proof-of-work and proof-of-stake or proof-of-stake methods use algorithms to verify the exchange of cryptocurrencies or their creation on the blockchain network.

Obviously, these two methods use algorithms to secure the blockchain during transactional operations.

Decentralized work

To begin with, it must be said that working with cryptocurrencies is decentralized. That is, transactions must be verified by computers located in different locations. The goal is to make cheating difficult and very costly for hackers.

These methods require blockchain participants to prove that they have provided a resource such as energy, processing power, or money to complete a transaction.

What is the main difference between Proof of Work and Proof of Stake?

Well, the way the blockchain algorithm qualifies and selects users to add transactions to the blockchain differs depending on whether proof of work or proof of stake is used.

In the case of proof of work, the algorithm uses complex problems that the machines of the participants must solve. Thus, the power of machines is actively used, especially since problems are solved through a series of trial and error.

And as the cryptocurrency network grows, transaction times can slow down, as it requires even more energy and even more power.

Alternative to proof of work

Now let’s move on to proof of stake, also known as “proof of stake”. The Proof-of-Stake system has been designed as an alternative to Proof-of-Work considering power consumption, environmental impact and scalability.

Last week, cryptocurrency giant Ethereum took the plunge and switched its technology infrastructure to this algorithm. A new infrastructure called “The Confluence” has reduced the power consumption of the Ethereum blockchain by 99%.

Why ? Because in this case, not the most powerful computers win: cryptocurrency validators appear.

Reward the stake, not the processing power

So you say to yourself: who are these cryptocurrency validators? Well, these are blockchain users who already own a certain number of cryptocurrencies. A portion of that amount is then used as a deposit so they can confirm the transaction. And once the transaction is confirmed, they get paid for the service rendered.

So, the main difference between proof of work and proof of stake is that in a proof of work network, users are rewarded for their computing power, whereas in a proof of stake network, cryptocurrency holders are rewarded for their stake.

Of course, the main problem with proof of stake is the large initial investment required to buy a stake in the network. Those with the most money may have the most control due to the weight of the algorithm when choosing a validator.

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