Quality Focused. Masternode & Staking.

PoS vs. PoW

 

The fundamental different between Proof of Stake(PoS) and Proof of Work(PoW) is the manner in how the next block is written to the blockchain. In PoW the miner is required to purchase specialized hardware to be able to compete with other miners in solving the cryptographic puzzle. Upon completing the puzzle first, the miner is allowed to write the next block to the chain and rewarded with the output of that cryptocurrency. This process is resource intensive(hardware and investment wise) and there are some long term sustainability concerns about environment impact of cryptocurrency mining operations.

PoS looks to significantly minimize the hardware investment and focus on enabling users to secure the network via staking and masternodes. Users who have some amount of investment into the network can participate in the opportunity to write and validate the next blocks on the chain. The only investment needed is a computer(physical or virtual) that is always on. Staking rewards are determined by a mix of number of coins, length coins have been in the wallet, and some random algorithms to combat manipulation of the protocols.

In both scenarios, investors and enthusiasts are moving accepted value(fiat or crypto) to purchase either mining hardware to produce hash power or coins for staking or collateral to participate in the network. Ethereum is moving to PoS soon and awareness of this consensus mechanism is expected to spread as it becomes more mainstream.

Neither consensus is the perfect approach and both have their risks and attack vectors.