blockchain(proof of work vs proof of stake)

Consensus mechanisms — Blockchain

Proof of Everything — Blockchain Technology

So, you are interested to known the major models of blockchain i.e. (Proof of Work vs Proof of Stake. Or maybe you just want to know little about the process of how both work,or other popular blockchain such as ethereum, bitcoin etc. Either way you have come to the right place.

Proof of Work/Stake
Proof of Work/Stake

Fun Facts-:

Proof of work and proof of stake both of these models are called “Consensus mechanisms’ and they are required to confirm the transaction that takes place in blockchain.
Before explaining proof of work and proof of stake, Let’s discuss what is blockchain.

What is Blockchain?

Blockchain technology is simply defined as decentralized, distributed ledger that records the provenance digital asset.
Digital assets are distributed instead of copied or transferred.
These assets are decentralized allowing real time access.

Now let’s understand what is proof of work and proof of stake and how both of them work.

Proof of Work
Proof of Work

Proof of work

Proof of work is a computer algorithm which is currently used by cryptocurrencies like Bitcoin, Ethereum. It is used to determine how an network is sure that the transaction is valid and that someone is not trying to false things such as spend the fund twice.
Proof of work is based on an advanced form of cryptocurrencies.
Cryptocurrency uses a mathematical equation that is so difficult. Only powerful computers can solve them. Once it is solved, the network knows that the transaction is authentic.

Hashcash(SHA-256) is the proof of work function that bitcoin miners use to solve computationally difficult math problems in order to add blocks onto the blockchain. This hashcash produces specific kind of data that is used to verify that a substantial amount of work has been carried out.

Proof of Work has its own benefits and demerits. Some of demerits are:

  • Requires more electric power which in turns costs the miners.
  • High computing power which is expensive.
  • With more and more coins get released miner rewards come down as coins become less to mine.

How transaction are verified in Proof of Work

Bitcoin transactions take 10 minutes before they are confirmed as valid. In that span of time a new transaction is created called block.
Every block contains different transactions within it, which are independently verified.
To solve or verify these somebody must use their computational power to solve a cryptographic algorithm.
Once this is solved, the transaction marked as valid, it is posted to the public blockchain for everybody to view it.
And for solving these people are rewarded with additional bitcoin for their efforts.
And the person who solves the mathematical equation first gets rewards.
So, I guess you have understood how transactions are verified in proof of work.
Now let’s move to Proof of Stake how transactions are verified.

Proof of Stake
Proof of Stake

Proof of Stake

In simple language we can say that a person can mine or validate block transactions according to how many coins he or she holds.
It is less risky.
A stake is a value / money we bet on a certain outcome.Proof of stake is a consensus algorithm that decides on who validates the next block, according to how many coins you hold, instead of miners cracking cryptographic puzzles using computing power to verify transaction.

Some of the benefits of Proof of stake are as follows:

  • No need for expensive hardware.
  • It would not consume high electricity so it is energy efficient.
  • Faster validators.

How transaction are verified in Proof of Stake

The proof of stake model uses different processes to confirm the transaction.
Here individual creates the next block based on how much they have staked.
Here a person gets simply a transaction fee who contributes to verify the transaction.
To validate the transaction, users must put their coins into a specific wallet.This wallet freezes a coin, which means they are being used to stake the network.

For example,suppose blockchain has a total of 1000 coins in circulation.
And you have purchased 100 coins. This means you have stake 10% of total coins in circulation and you have a 10% chance to win the reward.

Why Proof of Stake is much better than Proof of work.

In my opinion proof of stake is much better than proof of work as it is energy efficient and requires less expensive hardware only need is internet.
Other than that some of the issues which proof of stake solve are:

Centralization: I have told you that proof of work requires expensive hardware and also blockchain gives people who purchase powerful hardware devices a greater chance of winning the mining reward.

What if in a centralized organization buying thousands of devices which generate the highest mining power.This type of organization is known as mining pool and these give a chance to solve cryptographic sum first and to win, which is an unfair system.
This is where proof of stake is different. POS models prevent people from joining in groups and those who contribute to the network by freezing the coins are rewarded.

51% Attack: 51% Attack describes the unfortunate events when group or single person gains more than 50% of total mining power. If that happens, the Proof of work blockchain allows a person to make changes to a particular block.

In Proof of Stake it would not make financial sense to attempt to perform an attack of 51%.


POS and POW both have their own merit and demerit. Proof of work is a current way to mine ethereum, bitcoin, dash etc.
However, as blockchain technology becomes more advanced, lots of other consensus algorithms are hitting the market, all with their merit & demerit.
There are various models that are currently in use in various companies that used blockchain technology in their spectrum of the workflow. And with time and technology shooting up like never before, the chances of establishing a bigger ground is not very far.

So, these are some issues regarding proof of work and proof of stake and I hope you have understood it.


Jaiinfoway you right partner for Blockchain technology using Cloud solutions and services .

Jaiinfoway -: When you choose a Blockchain consultant, you’ll be working hand in hand with the experts who helped various clients build infrastructure using Hyperledger or Ethereum Blockchain. We’ll educate your team on best practices and guiding principles for a successful implementation. check out our site for more details

Related Posts

Leave a Reply

Your email address will not be published. Required fields are marked *

Jai Infoway © All Right Reserved