What Is The Difference Between Proof-of-Stake and Proof-of-Work?

Proof of Stake? Proof of Work? We explain the difference between two common consensus mechanisms that make blockchains tick.

If you have done your research on your favourite cryptocurrencies, chances are you have come across the terms Proof-of-Stake and Proof-of-Work. What exactly are they?

What is a Consensus Mechanism?

Simply put, a consensus mechanism is used by all cryptocurrencies for three purposes. They are used to verify the accuracy of all transactions on the blockchain, ensure the security of the system, and ensure all parties agree on and store the same information. Not sure how blockchains work? Click here to learn more.

Why do blockchains need a consensus mechanism? Let’s illustrate the issue with a simple children’s game — Pass The Message. A message is given to the first person, but by the time it reaches the last person the message rarely resembles the initial phrase. While it raises a chuckle or two in a play setting, it presents a major headache when hundreds of nodes need to store the same information simultaneously and accurately.

With a consensus mechanism in place, it ensures all parties involved in the network can agree on a data in a trustless environment. And such mechanisms come in the form of Proof-of-Work and Proof-of-Stake.

Read the full article here on CoinPasar!