Consensus Mechanisms: A Matter of PoW and PoS

tl;drConsensus mechanisms are plans of actions that computers implement to achieve a general agreement, trust and security and determine what is true across the network. Regarding blockchain, it means that at least %51 of nodes or users on the network agree to the current condition and the next global state for the blockchain. Due to this mechanism in a cryptonomic system, cyber-attacks are reduced by %51. Because if a hacker intends to attack, she needs to take control of %51 of the network to launch attacks, which is next to impossible. There are many types of consensus mechanisms in the blockchain, the two most important of which are used by most cryptocurrencies today, i.e., Proof of Work (PoW) and Proof of Stake (PoS).
Consensus Mechanisms: A Matter of PoW and PoS
Consensus Mechanisms: A Matter of PoW and PoS
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What Is Proof Of Work (PoW)?

To understand the concept of PoW, you first need to know what a blockchain is. To master the ups and downs of blockchains, check here. Whether you are new to the crypto world or have been researching for a while, you should have heard about Proof of Work. It is a type of consensus mechanism that describes how to update a public ledger like blockchain. PoW is used as a way to secure the blockchain. Proof of Work mechanism is the heart of Bitcoin and was first introduced by Bitcoin and then spread to become a widely used consensus algorithm in many cryptocurrencies like Ethereum.

How Does It Work?

When a transaction is broadcasted through the network from any wallet, it develops in the mining pool, where it should be confirmed. Miners confirm and validate the transactions, put them into the block, and add the block to the blockchain. But this process needs to follow certain and simple mathematical rules. To do so, miners should guess the hash that consists of some numbers, which is like a computational puzzle. Although these puzzles are challenging to solve, they easily verify the correct solution. Miners guess the numbers by running programs on the supercomputers. When merged with other data provided in the block, these numbers should pass through the hash function and be produced as the result. When a result is found, miners are allowed to add the block to the blockchain. The first miner who solves the puzzle gets coins as a reward for the work he has done. So, Proof of Work is like a key or main solution to add a block to the blockchain.

Pros and Cons of PoW

On the one hand, Proof Of Work ensures the security of the distributed digital payments network. On the other hand, it takes a lot of time, energy and electricity power and impacts the environment in a negative way.

What Is Proof Of Stake (PoS)?

Instead of using tremendous amounts of electricity to run computers and mining in massive warehouses to guess the numbers and win the rewards, the Proof of Stake consensus algorithm was introduced - back in 2011 on the Bitcointalk forum - to solve the problems of the most popular algorithm in use, i.e., Proof of Work.

How Does PoS Work?

In Proof of Stake systems, blocks are said to be ‘forged’, not mined. As a user, if you want to take part in the forging process, you have to lock a certain asset into the network as your stake. Each cryptocurrency using the Proof of Stake algorithm has its own set of rules and manners. If you forge the block, you will get rewarded with more of the cryptocurrency in the form of the native token of the network. The more crypto you stake, the more likely you are to process transactions and create blocks. Proof of Stake relies on "proof" of how much "stake" users have.

Which Cryptocurrencies Use Proof of Stake?

Cosmos (ATOM), Cardano (ADA), Polkadot (DOT), Solana (SOL), VeChain(VET) are the most popular decentralised blockchains that apply the PoS mechanism to prepare transactions faster, have a lower environmental impact, lower barriers to entry.

Proof Of Work VS Proof Of Stake

Both mechanisms solve some problems and have some deficiencies, let’s take a quick look at the advantages and disadvantages of the two in comparison.

  • Energy consumption: Proof of Work uses much more energy and electricity than Proof of Stake.
  • Required tools: Proof of Work mechanism requires special mining equipment, while Proof of Sake doesn't need any tools, and a standard server is sufficient for Proof of Stake.
  • Security: Proof of Work provides more security than Proof of Stake, and the greater the hash, the more secure the network is.
  • Centralisation: Proof of Work solutions are increasingly designated for large-scale operations, making them more centralised, but Proof of Stake defines the winners based on the size of their stake.
  • Forking: Although Proof of Work systems naturally prevent constant forking, in Proof of Stake, forking is not automatically discouraged by the system.


By reading this article, you should have learned quite a bit about both of these mechanisms and have realised that they achieve the same end goal but through different processes. Understanding how Proof of Work and Proof of Stake works is the key to understanding cryptocurrency and how it operates. Generally, before investing in any coin and getting involved, you should do your own research and be aware of all the components. Through our educational post on, you can be an educated investor and invest confidently.


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