The Proof of Work mechanism has several drawbacks which can be easily understood by people researching on blockchain. Blockchain has a standard method of maintaining consensus among the members. However, the developers have faced several complaints and problems associated with Proof of Work. The blockchain network works on a system of peers or equally privileged agents. The concept of peer is simple. A peer shares his personal space with the network so that he can get his share of accessibility over the blockchain.
The term consensus means an agreement or set of rules which is mandate for all the nodes to achieve for the validation of transactions and blocks. There are two major types of consensus algorithms:
Proof of Work: It is the first ever consensus algorithm applied in practice. This is used in practice by Bitcoin, Ethereum and its subsidiaries like Litecoin, Bitcoin Cash and Dogecoin. Bitcoin blockchain is inclusive of miners, nodes and stakeholders. Their task is to validate transactions, and prevent them from double spending. In the proof of work mechanism, miners are used for the purpose of solving complex mathematical problems. The miner solving the problem first, receives a reward for the proof of work.
The biggest problem with the proof of work consensus mechanism lies with the excessive consumption of resources associated with the process. There are thousands of miners in the blockchain and the consumption of electricity becomes reciprocally high for congested networks. This is one of the major reasons why Ethereum is planning to avoid the proof of work consensus. For the future, Ethereum is planning to go for the Proof of Stake mechanism.
Read More: What Is Proof of Work (PoW)?
Proof of Stake: The proof of Stake has a lot of promise on offer for the blockchain networks especially in the backdrop of the numerous problems identified with the proof of work consensus. This mechanism works in a completely different manner. Proof of Stake does not reward for finding blocks. There are no miners working on the system waiting for a reward against finding a block. In Proof of Stake consensus, the system picks a block on the basis of wealth. Those creating the blocks are known as the forgers. They take network fees against the task of transaction validation. The process of validation is a full proof mechanism which helps in preventing disasters like double spending and Sybil Attacks.
The proof of mechanism promises to save a lot more energy compared to the existing proof of work mechanism. The Proof of Work consensus mechanism offers a robust yet energy efficient technique of consensus. This is one of the biggest advantages of Proof of Stake over Proof of Work. Mining of bitcoins is an activity which requires intensive usage of computers. With the increase in the volume of computer users, the volume of electricity consumption increases manifolds. This puts a significant amount of pressure on the energy resources which otherwise could be better utilized for other activities. The problem of electricity consumption surges have been solved with the proof of stake consensus. The Proof of Stake mechanism is expected to become the mainstay platform for the future.