Proof-of-Work (PoW) is a consensus mechanism that involves solving intricate mathematical problems using significant computational power and resources to validate transactions on a network for a reward. This process is how crypto is mined, and transactions are verified on the blockchain.
The purpose of this intensive use of time, computing power, and energy is to make fraudulent activities prohibitively expensive, outweighing the potential benefits. Bitcoin, the leading crypto, utilizes PoW.
Proof-of-Stake (PoS) is an alternative consensus mechanism for validating transactions on a blockchain. It was developed as a more energy-efficient substitute for Bitcoin‘s Proof-of-Work (PoW) system.
In PoW, miners compete to validate blocks based on their hashing power, whereas, in PoS, blocks are assigned based on the amount of crypto a participant has staked (locked away for a certain period) in the system.
Stakers, the PoS equivalent of miners, lock their funds in a specific smart contract within the PoS architecture. When the network needs to create a new block, an algorithm selects a staker to publish it based on the proportion of the total staked funds they hold.
Unlike Proof-of-Work (PoW) protocols, PoS systems do not promote excessive energy consumption.
