What’s the difference between “proof of work” and “proof of stake” in the blockchain?
Both proof of work and proof of stake are consensus algorithms that are designed to achieve reliability in a network involving multiple unreliable nodes.
In Proof of work;
- The probability of mining a block depends upon how much work the miner does in the form of a computer solving an equation
- A block reward is given to the first miner who provides the solution to each equation
- Miners compete to be the first to find the solution
The problem with POW is that it uses up a lot of energy.
Whereas, in Proof of stake;
- The probability of validating a new block is determined by how large of a stake a person deposits( how many coins they block from their balance)
- The validators do not receive a block reward, instead they collect fees as their reward