Proof of Work vs Proof of Stake: Recently you might have heard about the idea lớn move from an Ethereum consensus based on the Proof of Work (PoW) system to one based on the so-called Proof of Stake.

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In this article, I will explain khổng lồ you the main differences between Proof of Work vs Proof of Stake và I will provide you a definition of mining, or the process new digital currencies are released through the network.


Also, what will change regarding mining techniques if the Ethereum community decides lớn vày the transition from “work” lớn “stake”?

This article wants lớn be a basic guide khổng lồ understanding the problem above sầu. If you are looking for a more detailed walkthrough, please check out our blockchain courses on Ethereum.

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“You automatically get inducted after some time,” explained Vitalik Buterin himself on a post shared on Reddit.

“There is no priority scheme for getting inducted into the validator pool itself; anyone can join in any round they want, irrespective sầu of the number of other joiners,” he continued.

The reward of each validator will be “somewhere around 2-15%, ” but he is not sure yet.

Also, Buterin argued that there will be no imposed limit on the number of active sầu validators (or forgers), but it will be regulated economically by cutting the interest rate if there are too many validators và increasing the reward if there are too few.

A safer system?

Any computer system wants khổng lồ be không tính tiền from the possibility of hacker attacks, especially if the service is related khổng lồ money.

So, the main problem is: proof of stake is safer than proof of work?

Experts are worried about it, & there are several skeptics in the community.

Using a Proof-of-Work system, bad actors are cut out thanks khổng lồ technological and economic disincentives.

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In fact, programming an attaông xã to lớn a PoW network is very expensive sầu, và you would need more money than you can be able khổng lồ steal.

Instead, the underlying PoS algorithm must be as bulletproof as possible because, without especially penalties, a proof of stake-based network could be cheaper to lớn attaông chồng.

To solve this issue, Buterin created the Casper protocol, designing an algorithm that can use the set some circumstances under which a bad validator might thảm bại their deposit.

He explained: “Economic finality is accomplished in Casper by requiring validators to submit deposits to lớn participate, & taking away their deposits if the protocol determines that they acted in some way that violates some phối of rules (‘slashing conditions’).”

Slashing conditions refer to lớn the circumstances above or laws that a user is not supposed lớn break.

Proof of Work vs Proof of Stake: Conclusion

Thanks to lớn a PoS system validators vày not have lớn use their computing power because the only factors that influence their chances are the total number of their own coins & the current complexity of the network.

So this possible future switch from PoW to lớn PoS may provide the following benefits:

Energy savings;

A safer network as attacks become more expensive: if a hacker would lượt thích khổng lồ buy 51% of the total number of coins, the market reacts by the fast price appreciation.

This way, CASPER will be a security deposit protocol that relies on an economic consensus system. Nodes (or the validators) must pay a security deposit in order khổng lồ be part of the consensus thanks to the new blocks’ creation. Casper protocol will determine the specific amount of rewards received by the validators thanks to lớn its control over security deposits.

If one validator creates an “invalid” block, his security deposit will be deleted, as well as his privilege to be part of the network consensus.

In other words, the Casper security system is based on something like bets. In a PoS-based system, bets are the transactions that, according to lớn the consensus rules, will reward their validator with a money prize together with each chain that the validator has bet on.

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So, Casper is based on the idea that validators will bet according lớn the others’ bets & leave positive sầu feedbacks that are able to lớn accelerate consensus.