Proof of work has been the consensus methodology for mining cryptocurrencies since the beginning of their existence. In proof of work, miners solve a cryptographic puzzle to be rewarded with new coins. That’s why Bitcoin’s mining is decentralized and the majority of the mining power is held by a few miners. But what if there was a consensus methodology that could decentralize the consensus process?

If you’ve been following the crypto space, you’ve likely heard of the fact Bitcoin miners are currently processing transactions on the network at 10-minute intervals. This is a record breaking pace, and has been a boon for the network, since it’s helped to drive network security and decentralization while not increasing the amount of energy required to run the network. On the other hand, this increased activity has also lead to a spike in the price of Bitcoin, since the miners are now being rewarded with a higher transaction fee per block.

The Proof of Work (PoW) consensus algorithm requires miners to expend a huge amount of computational power to verify transactions. This ensures that nodes of the network will remain honest, and that the network’s integrity can be maintained. PoW is the backbone of the Bitcoin blockchain. Its the reason why the Bitcoin network can process so many transactions per second.

Consensus methods include Proof of Work and Proof of Stake. They are the techniques for verifying transactions on the blockchain network without the need of a third party. They seem to have the same functionality. There are, nevertheless, some distinctions between them. 

Perhaps you’d want to learn more about each consensus process and what it involves. Or maybe you’d want to learn more about how Bitcoin and other cryptocurrencies are mined. You will discover what these models are and what they involve in this post. You’ll also learn about the various techniques used by the models to verify transactions. 

Work Samples (PoW)

Proof of Stake vs Proof of Work: What's Better? 1

Satoshi Nakamoto invented Proof of Work because he sought a method to verify transactions on his cryptocurrency without engaging a third party. The first cryptocurrency, Bitcoin, was created by Satoshi Nakamoto. His invention on the transaction confirmation technique resulted in the PoW system.

Blockchain consensus is determined through Proof of Work. In other words, it’s utilized to check whether or not a transaction is legitimate. The system is trying to figure out whether the transactions are real or fake. The Proof of Work mechanism will let the network to detect whether a user is attempting to “eat his cake and enjoy it,” i.e., transacting the same money twice.

Proof of Work is a kind of advanced mathematics that is based on cryptography. Cryptography is based on difficult mathematical equations that can only be solved with the help of powerful computers. One equation is never generated twice by the system. As a result, when an equation is solved, the computers save it as a new transaction.

Following the introduction of Bitcoin, many additional cryptocurrencies based on the original Bitcoin code have emerged. These cryptocurrencies must utilize Proof of Work as well since they are clones of Bitcoin. 

Proof of Work is a groundbreaking technical advancement that aided in the solution of these equations and the confirmation of transactions in its early stages. It does, however, have certain restrictions. To confirm transactions, the model requires a lot of power. The energy was quickly depleted by the hefty computer. Furthermore, the model can only process a certain amount of transactions twice. As a result, if you have a lot of transactions to process, you’ll have to calculate the equations one by one. 

A restriction, as is characteristic of blockchain technology and the crypto industry in general, leads to greater innovations. As a result, many additional consensus methods have been developed following the Proof of Work. The Proof of Stake model is one of the most prominent of these consensus methods.

Stakeholder Proof (PoS)

Proof of Stake vs Proof of Work: What's Better? 2

Sunny King and Scott Nadal, two developers, came up with the Proof of Stake concept in 2012. They developed this model in response to the PoW paradigm’s limitations. During the introduction of the PoS model, the developers claimed that the PoW model and Bitcoin used up to $150,000 worth of energy per day.

The Peercoin blockchain project was the first to utilize the Proof of Stake methodology. This new approach resulted in a more equitable and fair mining system, as well as increased transaction efficiency. Not only did the system increase transaction scalability, but it also used less energy, eliminating the exorbitant electricity costs that the PoW model experienced. 

The system is gaining popularity as a result of these benefits. The model is attracting the attention of developers and stakeholders. Ethereum, the world’s second most popular digital currency, has switched from a Proof of Work to a Proof of Stake architecture. 

Which consensus method is used by which blockchain network?

Proof of Stake vs Proof of Work: What's Better? 3

In the crypto world, the Proof of Work and Proof of Stake models are the two most common consensus methods. While some blockchains have remained true to the Po paradigm, others have adopted the PoS model. 

The Proof of Work methodology is used to create a blockchain network.

The Proof of Work model is used by a number of blockchain networks, including:


The PoW technique was first used on the Bitcoin blockchain. Bitcoin was the first cryptocurrency to be established, and it has since paved the way for others to follow in its footsteps. Seven transactions per second can be verified on the Bitcoin blockchain. This isn’t the greatest figure, but it shows how far the system has gone with this capability. Furthermore, the network confirms each transaction after 10 minutes. 

As a result of these restrictions, transaction costs have risen. The transaction fees have piled up to unbelievable sums since the network’s inception in 2009, despite the fact that they were originally very low. In the early days of Bitcoin, completing a transaction cost just a fraction of a penny. 

Because of the cheap transaction cost, sending modest amounts became simple and popular. However, as the days and years passed, the Bitcoin network’s transaction fees grew more costly. Transaction costs soared to $40 per transaction in December 2017, when the network was at its peak. 

Although it is a comfort that the network is no longer so expensive, the transaction charge is still too high for most customers. The network may not be a viable worldwide payment system due to the model’s limitations and costs.


Ethereum is the world’s second-largest and most popular cryptocurrency by market capitalization. In terms of transaction volume, the Ethereum network has a stellar track record. Every day, it records over one million transactions on its platform. Its usage of smart contracts is yet another reason for its dominance. 

The Proof of Work methodology is used in this encryption. However, as is customary with technical advancements, Bitcoin’s capabilities have improved. The Ethereum cryptocurrency can process transactions in as little as 16 seconds. This accomplishment is a significant improvement above Bitcoin transaction times, which may take up to 10 minutes. Although there are crypto platforms with quicker transaction speeds, this is a significant increase. 

The disadvantage is that the scalability problems that plagued Bitcoin users continue to plague Ethereum users. The network has been designed to handle 15 transactions at a time. This figure is still low in comparison to the network’s needs.

Other prominent blockchains that utilize the Proof of Work concept include Bitcoin Cash and Litecoin. 

Proof of Stake networks are blockchain networks that use the Proof of Stake concept.

An alternative to the Proof of Work paradigm is the Proof of Stake model. It was designed to fulfill the same tasks as the Proof of Work system, but with more efficiency and a wider range of options. The Proof of Stake approach enables a miner to validate transactions depending on the quantity of currency in his or her possession. In other words, the more coins a miner possesses, the greater his or her mining power. 

The PoS approach is a huge step forward from the PoW paradigm. The PoS model is based on the quantity of currency a miner holds, as opposed to the prior model, which needed a large amount of energy to execute transactions. Miners under the PoW system had to sell their coins to cover mining expenses, but this is no longer necessary with the PoS scheme. You may mine more coins the more coins you earn.

The point-of-sale (PoS) concept was developed to enhance security. Its purpose is to deter miners from attacking. The method is designed to reward miners for avoiding attacks on the network since they would be ineffective. The PoS approach is used by several cryptocurrencies, including:


Dash employs the Proof of Stake methodology, which allows it to complete transactions in a matter of seconds. The network has the ability to transmit and receive money in a matter of seconds.


NEO is a Chinese smart contract technology that has swept the crypto world. It was first introduced in 2016, and its value has increased by 100,000 percent since then.

In both the PoW and PoS methods, how are transactions verified?

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Both the Proof of Work and Proof of Stake models have been shown to be consensus methods. They’re used to double-check transactions. We’ll go through how each of the models handles transaction verification in this section.

Verification of Proof of Work transactions

The PoW models are used by a number of blockchain networks. The blockchain is used in this example. The procedures, on the other hand, are the identical for any cryptocurrency that makes use of the system.

When a user starts a transaction in the Bitcoin system, the transaction is recorded in a block. Each block includes a unique transaction, and each transaction must be validated separately. The blockchain may be expanded by adding new blocks.

The miners or nodes must solve a difficult mathematical problem known as the Proof of Work puzzle in order to validate a transaction without the involvement of a third party. This cryptographic issue is being worked on by many miners, and the first one to solve it will get a coin prize. When the decryption is complete, the system will upload the solved block of transactions to the blockchain, making it publicly available.

The problem with paying whomever solves the cryptographic method first is that individuals with costly and heavy hardware equipment will be at the top of the list for earning these prizes. 

Verification of Proof of Stake transactions

The point-of-sale (PoS) paradigm was designed to establish widespread consensus. The PoS system employs a different approach than the PoW paradigm for validating transactions and achieving consensus. Both approaches use cryptographic methods, but their goals are different. The Stake in the PoS paradigm is determined by the amount of coins an user owns for the blockchain they wish to mine.

People do not mine under the PoS paradigm since there are no incentives. Instead, the people in question are forgers. The transaction fee will be paid to the donors to the PoS system. 

To complete a transaction, the forgers, or users, will place their money in a wallet that will freeze them. This means the coins are being used to stake the network. Some blockchains that utilize the PoS method require miners to hold a certain number of coins in order for a user to begin staking. Any user who has staked the necessary number of coins may receive the reward, which is the transaction fee.

There is a variation in the payment for the miners based on the previous. All miners in the PoW system try to solve the cryptographic algorithm. The prize is a coin of the cryptocurrency being mined, and the winner receives it. The miner who has the most powerful hardware and processing power has a better chance of earning the prize.

The models select the winner in the Proof of Stake method based on the amount of coins they have staked. Anyone who has staked the necessary minimum quantity of coin may be the winner. 

Most people prefer the PoS method over the PoW system because it is more secure. This approach is based on the idea that individuals that stake their coins are more likely to protect the network by following the rules. If a forger engages in unethical behavior, their whole Stake may be forfeited. This mechanism will motivate them to keep the network running. 

In addition, forgers are rewarded depending on the amount they stake. If you bet more, you are more likely to win. However, if you conduct a transaction that is not in accordance with the system’s rules, you are likely to lose your coins. 

In addition, unlike the PoW model, the PoS model’s mining process does not need a lot of power to validate a transaction. A large quantity of energy is required to validate a Bitcoin transaction. 

One of the reasons why the PoS model seems to be favored over the PoW method is because of its high energy usage.


We’ve gone over the various features of both models and how they’re used to verify transactions in our discussion of Proof of Work vs. Proof of Stake. A reward is paid to the winning miner under the PoW method, with transactions confirmed in each block. Miners with high-performance hardware are more likely to win and get the prize. One of the reasons the PoS model was brought on board was because of the PoW model’s high yearly energy consumption rate.

Disclaimer: The material on this website is not intended to be trading advice, assumes no responsibility for any investments made as a result of the information on this page. Before making any financial choices, we highly advise doing independent research and/or consulting with a competent expert.

I’ve seen many debates about the pros and cons of Proof of Stake vs Proof of Work over the past year. In my opinion, the pros of PoS system (POW) outweighs the cons, but I rather focus on the pros.. Read more about proof of stake vs proof of work ethereum and let us know what you think.

Frequently Asked Questions

Will proof of stake replace proof of work?

Proof of work is the current consensus algorithm used by Bitcoin. It is a process where computers solve difficult mathematical problems to create blocks on the blockchain. Proof of stake is an alternative consensus algorithm that requires users to put up their stake (usually in cryptocurrency) as collateral before they can start mining for new coins.

Is PoS or POW more secure?

PoS is more secure because it uses a system of Proof of Stake where the more coins you have, the higher your chances are to mine a block. POW is more secure because it uses a system of Proof of Work where the more computational power you have, the higher your chances are to mine a block.

Which advantages does the proof of stake consensus provide over the proof of work Consensus?

Proof of stake consensus is a type of algorithm that allows for cryptocurrencies to be mined without the need for costly and energy-intensive mining rigs.

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