Proof Of Work VS Proof Of Stake.

  • Cryptocurrency
  • Article
  • 2 mins

When Satoshi Nakamoto was building the first-ever cryptocurrency, Bitcoin, he had to find a way to verify transactions without a third party. So, he created the Proof of Work system.
The PoW idea was originally published by Cynthia Dwork and Moni Naor back in 1993, but Markus Jakobsson and Ari Juels coined the term proof of work in a document published in 1999.

First of all, let us start with the basics.

Proof Of Work.

Essentially, Proof of Work determines how the blockchain reaches a consensus. It is an advanced form of mathematics called cryptography.
Cryptography uses mathematical equations that are so difficult that only powerful computers can solve them.

Proof Of Stake

In POS, instead of miners, there are validators. The validators lock up some of their Ether as a stake in the ecosystem. The next block that gets added to the chain is decided on by validators. When the block gets added, the validators get a block reward in proportion to their stake.

Now let us look at the main subject of this article.


Simply put, proof of work requires high computational power from the miner to validate transactions. On the other hand, proof of stake requires the validator to have locked in a certain amount of the said blockchain's native cryptocurrency to validate transactions.

Proof of Work: How are Transactions Verified?

There are thousands of networks that use proof-of-work-based blockchains.
Every block contains different transactions, which must each be independently verified.

For the network to achieve this without a third party, somebody must use their computational power to solve a cryptographic algorithm. Then it is posted to the public blockchain, and the miner gets a certain amount of the native cryptocurrency as a reward.

Proof of Stake: How are Transactions Verified?

Technically speaking, there are no miners. Instead, they are "forgers" because there is no block reward. Every time a new block is verified, those who contribute to the Proof of Stake system earn the transaction fee.
The opportunity to validate transactions is given to those who put a required amount of coins into a specific wallet. This wallet freezes the coins, meaning that they are being used to stake the network.

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Proof Of Work VS Proof Of Stake.

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