As we all know now pretty much about Bitcoin & other crypto asset mining. There is an important side of mining which is Proof of Work (POW) and Proof of Stake (POS).
“PoW is a system that combines mining capability with computational power, whereas PoS is an alternative, recognized as a virtualized mining.”
|Proof of Work||Proof of Stake|
|1- It defines an expensive computer calculation called mining blocks.
2- A reward is given to the first who solves each block calculation.
3- Miners compete with computer power to be the first to find a solution
|1- Here miner of a new block in the blockchain is chosen in a deterministic way depending on stake (wealth)
2- Miners do not receive a block reward but collect network fees as reward.
3- This mechanism makes PoS mining much more energy efficient.
The basic difference between PoW and PoS is that PoS does not require graphics cards or a very powerful system for mining. PoS simply depend on the stakeholder staking its coins to the assigned mining network; the more coins get staked, the higher chances occur of receiving the transaction fees of other investors. Another value of PoS is that the computers and systems are not very expensive; they also do not consume lots of electrical power, making PoS a far greener alternative to PoW. There are also no block rewards in PoS, making the transaction fees is the only reward.
Proof of Work is actually involves running powerful computers that must have high hash rates. Hash rates are the number of hashes or total numbers a computer can come up with every second, needed to solve an assigned block. The common aspect of both of the sides is mining; both have the difficulty factor to them where there are more miners on the network, the lower the chances you have of mining a block. So this means that you will receive a lower reward.
The expert believes that Proof of Work may outlast Proof of Stake mining coins in the long run. Ethereum will be swapping over to PoS in the near future.