Learn about PoW vs PoS | The Most Popular Consensus Algorithms

Proof-of-Work (PoW) and Proof-of-Stake (PoS) are the mechanisms that control blockchains’ security so that users can add new cryptocurrencies. They have the same goal, but the methods of their achievement are very different.

Let’s go into the details of each one.

Let’s Come to a Consensus! | Before Proceeding to PoW & PoS

The main characteristic of blockchain is decentralization. It means that no one can make changes to their initiative. Control is performed by thousands of people who have the same database, and they all come to an agreement. In other words, they reach a consensus.

Wonder how these number of absolutely different and unfamiliar people agree with each other? Or why is it impossible to fake a version of a blockchain, and it’s unreal to send 1 Bitcoin twice?

Well, the solution to all this is Proof-of-Work.

Proof-of-Work | The Winner Takes It All!

PoW mechanism can easily be called a starter of cryptocurrency. This definition was first used and introduced by Satoshi Nakamoto, the founder or group of founders of Bitcoin.

Basically, Proof-of-Work is a method of decentralized consensus that requires network members to solve arbitrary mathematical puzzles to ensure the system is not hacked. This process is also known as mining. Miners are in the race to be the first to update the blockchain with the latest verified transactions to be rewarded by the network’s crypto.

Miners’ role is to ensure the network runs safely and correctly by consuming many resources. In addition, miners are also creating and validating blocks of transactions. It is also important to note that they must use highly specialized mining hardware to solve complex mathematical puzzles.

It is All About the Hash!

Hashing is one of the main components of modern cryptography and the blockchain algorithm. Hashing is converting any amount of information into a unique set of symbols special to that kind of incoming information. This set of symbols will be called a hash.

When miners create a new block for the blockchain, they have to provide two hashes:

🔗First: with all transactions in the block;
🔗Second: PoW, which proves that the miner spent a massive amount of actual energy to create the block with the help of mining farms.

PoW also solves the problem of wrong chain sequences in the blockchain. The point is that each created block contains the previous block’s hash. That is how we can trace the history of blockchain back to its inception. So, if someone tries to change one of the blocks to another, the hash of the whole chain will instantly change.

From all this, Proof-of-Work has proven to be a reliable consensus algorithm. So we can highlight a few of its main advantages:


The most popular cryptocurrency examples of PoW are Bitcoin, Litecoin and Dogecoin. And what about Ethereum? They decided to switch to a more environmentally friendly and less energy-intensive consensus algorithm called Proof-of-Stake.

Proof-of-Stake Meaning | Making Crypto & Saving the Planet

As a PoW, PoS goal is to reach a consensus and to keep the underlined blockchain secure. However, the major difference is that PoS requires much less work and energy to validate data blocks.

Proof-of-Stake is not about race but more like a lottery. Blockchain chooses the winner itself to validate the transaction. This winner gets a much smaller reward as less energy and work are made.

But how do we know that the winner won’t validate a wrong transaction? Here’s the process that answers that question:

1️⃣ To join the “lottery”, you have to stake some amount of your cryptocurrency into storage. In other words, your crypto is locked.
2️⃣ If you cheat, you will lose a portion or all of your staked crypto.
3️⃣ The higher the amount of your staked crypto, the more chances you have to be picked as a winner. Nevertheless, the process of choosing the winner is randomized. You’ll get a portion of the transaction fees if you’re selected. The more you’ve locked, the higher your profit is.

Mostly, validators are rewarded with already existing coins or tokens. These crypto have to be created via IDO or a protocol previously launched by PoW and then transitioned to PoS.

As you understand, Proof-of-Stake doesn’t require much-specialized hardware and energy usage, so it’s ecologically safe.

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Summing Up Main Differences Between PoW & PoS

Now that you know the details of each consensus algorithm, let’s briefly compare them for your better understanding:


  • Computational work determines mining probability.


  • The amount staked determines the validity of a new block.


Proof-of-Work and Proof-of-Stake are the cryptocurrency ecosystem’s two most common consensus algorithms. There’s a lot of debate about which one is the best. PoW recommended itself as a truly secure and reliable mechanism, while PoS is considered to be the improved version of it.

One thing we know for sure — the crypto world is fast-paced and unpredictable. So it’s up to you to decide which algorithm is better.

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