What is Consensus?

In the blockchain, a consensus mechanism is a system that validates a transaction and marks it as authentic. This mechanism lists all valid transactions of a coin in a blockchain to build trust in the coin among traders. Several currencies, such as Bitcoin, Ethereum etc., use this system for security purposes.

Proof of Work (PoW)

Proof of work (PoW) is a decentralized consensus mechanism used in many cryptocurrencies to verify the accuracy of transactions on a blockchain network.

Proof of work is a concept used in some public blockchains to demonstrate that a program did the work required to propose a new block for the chain. It is commonly called a consensus mechanism because, eventually, network consensus is reached after there is proof the work was done honestly (in this case, "honestly" means there were no attempts to alter data).

Proof of work is provided by sending the information in a block through a hashing algorithm, then adjusting variable fields until a hexadecimal number is reached that has a lower value than the network's difficulty target. This serves as proof that the program expended the computational effort to "hash" the block until a solution was reached.

Proof of Stake (PoS)

Proof of Stake (PoS) is a consensus mechanism where participants, called validators, are chosen to create new blocks based on the amount of cryptocurrency they hold and are willing to lock up as collateral. Validators earn rewards for validating transactions, which encourages them to act honestly. PoS is more energy-efficient compared to Proof of Work (PoW) and aims to maintain network security through economic incentives.

Proof of Stake (PoS) vs. Proof of Work (PoW)

Proof of Work (PoW) relies on miners solving complex mathematical puzzles to add new blocks, requiring significant energy and computational power. In contrast, Proof of Stake (PoS) selects validators to create new blocks based on the amount of cryptocurrency they hold and stake, making it more energy-efficient. PoW emphasizes computational effort for security, while PoS focuses on economic incentives and ownership.