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cryptocurrency 101: Understanding the two main consensus mechanisms
The world of cryptocurrency is a complex and rapidly developing space, and new technologies and consensus mechanisms appear regularly. At the base of cryptocurrencies, it is based on a decentralized network that allows users to control their own transactions and resources without the need for intermediaries such as banks or governments.
In this article, we delve into two of the most commonly used consensus mechanisms in cryptocurrency: proof of work (POW) and Palik’s proof (POS). These mechanisms are of key importance for the functioning of various cryptocurrencies and have significant implications for their safety, scalability and adoption.
proof of work (POW)
POW is the most commonly used consensus mechanism in cryptocurrency. For the first time he was introduced from the Hard Fork Bitcoin from 2008 and since then he was adopted by many other cryptocurrencies, including Ethereum, Monero and Litecoin.
In the Human Network, it competes with the solution to complex mathematical puzzles to confirm the transaction to blockchain. These puzzles have been designed to be difficult to solve using the current power of the computer, hence the term “proof of work”. The first miner who solves the puzzle can add a new blockchain transaction block and is awarded the newly broken cryptocurrency.
Here’s how it works:
- Miners collect and verify transactions in blockchain.
- Górnik chooses a transaction group that contains in the new block (“block prize”).
- MINER calculates mathematical puzzles for each transaction in a selected group.
- The first miner who solved the puzzle known as “proof of work” is awarded the newly broken cryptocurrency and the right to add the next block of transactions to Blockchain.
Advantages of Pow:
- Energy efficiency : POW requires significant computing power that reduces energy consumption.
- Safety : The use of complex mathematical puzzles hinders malicious actors to manipulate the network.
- Scalability : POW can handle a large volume of transactions per second.
POZP disadvantages:
- Energy consumption : Energy required to extract cryptocurrencies is significant, contributing to greenhouse gas emissions and environmental problems.
- centralized control : mining pools, which are often dominated by large companies or countries, can lead to centralization on the web.
Proof of Stak (POS)
POS gained popularity as a more energy -saving alternative to the poviat He was first introduced with Hard Fork Ethereum in 2016 and has been accepted by many other cryptocurrencies since then.
At POS Walidacze, they are chosen to create new blocks based on their balance of cryptocurrency in their wallets. Walidacze, who have more cryptocurrency (i.e. those who have more), have a better chance of choosing to participate in the validation process.
Here’s how it works:
- Users put their cryptocurrency in a wallet or replacement.
- A random selection pool is created that chooses users based on their balance.
- The user of the highest ranning from the pool is chosen as a validator.
Advantages of POS:
- Energy efficiency : POS requires much less energy than POW, which makes it more environmentally friendly.
- Increased security : Walidacists have more control over their assets and are less often manipulated by malicious actors.
- Reduced transaction fees : as the number of validations increases, as well as fees related to validation transactions.
Disadvantages POS:
- Centralization : The use of a random selection pool can lead to centralization on the web if a small group of users dominate in it.
- slower blocking times : POS may be slower than POW, because the process of checking correctness lasts longer due to the need for many validators.
