The PoW and PoS protocols are two giants that are currently in constant battle in the crypto community.
PoW vs PoS: meet these giants
MMany in the community wonder: Which is the best? Which protocol has the greatest future? Questions that are totally understandable seeing how the giants Bitcoin and Ethereum continue to face their own vision and technological commitment.
This leads us to try to understand what these protocols are, what they offer and how they can change the technological evolution that is always present in the crypto world.
What is PoW or Proof of Work?
The Proof of Work protocol or Proof of Work (PoW) It is a consensus protocol that works under the concept of requiring computationally complex work that is later verified by the network and included in the blockchain that uses this protocol. With all this work, the aim is to prevent malicious actors from consuming or attacking the network in a dangerous way.
In any case, the use of PoW points to an asymmetric strategy. This means that fulfilling the work required by the network is extremely complex (providing greater security to the network), but verifying that work is very simple (allowing the rest of the network to serve as an arbiter of the mining work).
It was precisely this feature that caught the attention of Satoshi Nakamoto when designing Bitcoin. That is why he implemented the HashCash system (a PoW system) in his renowned cryptocurrency.
What is PoS or Proof of Stake?
The Proof of Participation or Proof of Stake (PoS) it is one of the two most widely used consensus protocols in blockchain technology. Its name in English is Proof of Stake and from there derive the acronym PoS with which it is commonly known. The objective of this algorithm, as in PoW, is to create consensus among all the parties that make up the network.
The nodes that mine in PoS are called validators. The decision on which node has to validate a block is made randomly, but giving greater probability to those who meet a series of criteria. Among these criteria we can mention the amount of reserved currency and the time of participation in the network, but others can be defined. Once established, the random node selection process begins. Once the selection process is over, the chosen nodes will be able to validate transactions or create new blocks.
This reveals that Proof of Stake is a completely different process than the well-known Proof of Work (PoW) protocol. Where each of its nodes do hard computational work to solve cryptographic puzzles. Which means that PoW, unlike PoS, needs large amounts of energy and specialized equipment to carry out its operations.
In PoS, on the other hand, this is not necessary. In PoS the process is much simpler and energy friendly. These are the reasons why many blockchain projects are currently interested in this new protocol. The first coin to use this protocol was PeerCoin in 2012.
Comparison between PoW and PoS
Decentralization
Due to the nature of its operation, PoW tends to create more decentralized mining networks while PoS networks tend to greater centralization, not only of access (with quite high economic requirements to access) but also of operation (with nodes of validation that typically rely on centralized clouds
energy use
PoW networks use much more energy because they require powerful equipment to solve the cryptographic puzzles of the network while PoS networks are much more friendly (in direct terms) at the energy level, since their validation process is much less expensive in terms of energy. this sense.
Network security
Security in PoW networks depends largely on the mining power within the network, the difficulty of the algorithm used and the dynamic parameters of network difficulty, a set of elements that make these networks very secure, in most conditions. On the other hand, lSecurity in the PoS network depends exclusively on the proper functioning of the validation nodes, these being the only ones with real weight over the generation of new blocks and their inclusion in the network. The problem at this point is that validators with great power can misrepresent the governance of the protocol (as happened in LUNA) or simply use their economic power to torpedo the operation of other actors in favor of their interests.
For example, in PoS it is much easier to carry out Bribe Attacks, coin hoarding attacks, precomputing attacks, Sybil attacks or denial of services (DoS and DdoS).
Scalability
PoW networks present great challenges in the scalability of their operations, often requiring the construction of L2 solutions to solve this problem, while PoS networks have much more flexible mechanisms for scalability, which makes them an option with fewer technical challenges in this sense.
operational subjectivity
The PoW protocol is an objective consensus protocol in which a new node can independently arrive at the same current state as the rest of the network based solely on the rules of the protocol. On the other hand, PoS is not an objective protocol. It is weakly subjective, since a node needs recent state in addition to protocol rules and messages propagated through the system to independently determine the current state of the system.
Algorithmic implementation
PoW-based consensus algorithms and protocols are much simpler to implement and develop, as well as being less error-prone and therefore more secure, while PoS algorithms are more complex to implement, therefore more error-prone or more complicated to implement. extend its functionality. An example of this is the same Ethereum whose PoS was in development since 2018.
Fun facts
- PoS systems such as Ethereum (using what is known as nakamoto consensus) have the ability to offer 50% attack resistance for PoS. This means that 50% of all the wealth in the network is needed to be able to attack it. On the other hand, networks like Algorand (also using PoS) use a BFT-type consensus, which brings that resistance to only 33%. This makes it clear that the security of PoS will very much depend on how the final consensus is generated.
- Decentralization is one of the main concerns around PoS. For example, currently the majority of Ethereum staking is controlled by LIDO (more than 30%). Added to this is the fact that more than 60% of validation nodes are deployed on Amazon.
- Despite the arrival of PoS on Ethereum, the speed of the network and its scalability have not increased, in fact, that was never the end of this change. Scalability will depend on Layer2 and the shards when they arrive (in 2024, according to roadmap).
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