Different types of Consensus Mechanisms - Steemit Crypto Academy Season 4 - Homework Post for Task 6
Hello, dear steemian..
I am really very happy to become a part of this community by completing fixed homework tasks for beginners. After completing my 5th TASK. Today I am writing the sixth homework for professor @sapwood which is related to Different types of Consensus Mechanisms. i hope i can define better.
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(1) What is the difference between PoW & PoS? Advantages & Disadvantages? Which one is better in scaling Capacity? Examples?
Block-chain runs on a distributed ledger, there are different users which all have the same amount of authority over what is going on the block chain with transparent activities, All these Users (Nodes) will have to make a decision on what happens, but all of them can not make the decision.
A consensus algorithm is a process in computer science used to achieve agreement on a single data value with distributed processes. Its designed to achieve reliability in a network involving multiple unreliable nodes.
There are various Types of consensus algorithms,
Proof of work (POW) consensus algorithm,
Proof of stake (POS) consensus algorithm,
Delegated proof of stake (DPoS) consensus algorithm
What is the difference between PoW & PoS?
What is Proof Of Work ?
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A Proof of Work is a piece of Data which is difficult expansive, time consuming to produce but easy for others to verify and which satisfied certain requirements.
Proof of Work is the consensus mechanism where the right to update, reach a consensus on the next block of transactions is given to the miner who can provide proof of solving challenging and complex mathematical puzzle. All transactions are registered in a block as a hash that cannot be changed or manipulated.
This mechanism need more computer power because a high-capacity computer reduces the time used and increases rewards. Good capacity computer will require high energy consumption so its will be expensive. Because of this people come together, for increases their efficiency and increases their rewards.
First of all PoW has been in use since 1993, where it was originally used to combat spam emails,
after invented the BTC in 2009 by Sir Satoshi Nakatomo thought it could be used as a consensus mechanism it become very popular.
Proof of Work mining is not allowed or it's highly regulated in many counties. Bitcoin mine is best because its price is high and good in rewards which also uses about ten minutes to produce a block and uses a lot of electricity. then ETH. is best in rewards for mine. Btc Mining is not allowed in most parts of the world.
In Pakistan have not allowed to mine any Cryptocurrency with POW. Many people done secretly and they risk getting caught, and also spend bad time in jail Because It is against the principles of Pakistan.
But Mr Waqar Zaka Wiki have government permission that can mine in his province there is not ban he started an online academy for cryptocurrency that focuses on simplifying the concepts for average person. He is also starting Pakistan's first crypto mining farm using hydro-power in an attempt to bring Pakistan to the list of most developed countries.
| POW - ADVANTAGE | POW - DISADVANTAGE |
|---|---|
| Anyone can participate for POW | Its Highly risk of Attack more then 51% |
| It could give big profit if you can Equipment and energy requirements | in other side its expensive due to the equipment required, time consuming to produce |
| If sufficient equipment and energy are obtained by the miner, this POW can give better Profit | Its mine is very slow with low power and mine could be dump so High Power system needs for better Mine |
What is Proof Of STAKE ?
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A Proof of stake is proposed alternative to Proof of Work with A Proof of Stake, the resource that’s compared is the amount of Bitcoin a Miner holds.
PoS is a consensus algorithm in which an individual is chosen through an algorithm to validate transactions on the behave of their staked tokens. that are taken as collateral using system hardware. The validators are rewarded with transaction fees.
The Proof of Stake consensus mechanism not use system power its not expensive like POW and its not need a big amount of energy validate the transactions. Proof of Stake is decentralized and many other coins are trying to employ this mechanism in their system due to the expensive nature of the Power of Work mechanism.
That networks are on the Proof of Stake mechanism they have good market values due to the staked funds in the network Like ETH 2.0.
PoS mechanism is more accepted and valuable in parts of the world more than the Proof of Work mechanism.
| POS - ADVANTAGE | POS - DISADVANTAGE |
|---|---|
| It is not expensive to anyone can enter in this mechanism | Need best time to buy coins and gaining Profit |
| It does not require high System power and energy but staked coin must be high | Its mechanism always favors the rich user because earning depend on Staking or leave it on the network. |
| POS has Fast Transactions | POS liquidity limit. |
| The POS run by those who stake their coins in the platform | It is impossible to sell and generate PoS coins together. |
| The validators get rewarded by transaction fees as their profit | Its rewards value is less the POW mechanism. |
Which one is better in scaling Capacity ?
In my opinion, Proof of Stake is better in scaling capacity since it does not need huge System power and energy to solve all kind of complex mathematical puzzles for miners,
Proof of Stake performs better because it reduces the risk of mergers. and also have good speed of the deal. No take time consuming to produce, it can verify a good number of transactions in a given time. so I think POS has better performance.
Like ETH2.0, BNB, CARDANO, DASH, TEZOZ,
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The top 2nd one coin in crypto world i is ETH to ETH 2.0 moves from a proof of work to proof of stake consensus mechanism, which provides and allows low-cost & fast conversions and uses less energy with low rate gass.
The Ethereum network is the most used and desired block-chain network and Hundreds Nfts game work on ETH transitions base. You must Stake 32 ETH for being the validator in the Ethereum ecosystem. its Touch All time high a day ago now its Price is 751325.11 In PKR.
CONCLUSION
I learned a lot from this assignment, I have understood Consensus mechanism and some of its various forms that mostly used in Block chain system like the Proof of Work and Proof of Stake.
Thank you, for making this informative task. Maybe I have done some mistakes. just suggest me. I will reduce mistakes from the next..
#Club5050
I have Power up 51% of my liquid rewards i am sure i could be part of #club5050 with Extra point
