The blockchain can be a difficult concept to understand for those who are just stepping into this world. However, once you start reading information on different online sources, you start to get a hang of it all. One of the most discussed concepts in cryptocurrency and blockchaincommunities is the consensus mechanism. This is the mechanism that resolves the problem of confirming a new block in the blockchain. There are two major methods of consensus in the blockchaini.e. proof of work and proof of stake. They serve the same purpose but are quite different from each other in many aspects. Let’s know about them both.
Understanding Proof of Work
In this type of consensus, the miners on the network have to prove their existence and get a chance of confirming a new block on the blockchain through their resources. The more resources you have the more chances you will have of confirming the new block. In this particular scenario, resources mean computation power. When you have more computation power, you are likely to solve the mathematical puzzle to create a new cryptocurrency unit e.g. bitcoin unit.
However, this particular method requires a lot of computational power. It causes intensive use of electricity and computer resources, which makes this method environmentally harmful. However, this method is old and the most tried and tested method out there. Forking is nearly impossible in the proof of work consensus.
Understanding Proof of Stake
Due to the energy requirements of proof of work, it remains a debatable topic among cryptocurrency followers and owners. A good solution to the problem is proof of stake – this is the consensus used by the second most famous cryptocurrency, Ethereum. Proof of stake looks at the miners’ stake to reward them with a transaction fee.If you put more ethereum coins at stake, you have a higher chance of confirming a new block of the blockchain.
This particular method is tremendously more energy-efficient than proof of work. However, it is not as old and tested as the latter. Furthermore, it leaves room for forking, which is completely discouraged in the proof of work consensus. One of the biggest issues with proof of stake is the “nothing at stake” situation, which does not occur in the proof of work consensus.
Look beyond Complexities
If you have any interest in cryptocurrencies, you should look beyond these complexities. You can make a lot of money from digital coins by understanding some basics of their trading. You can make this XTR Gate full review your starting point for trading. Better yet, you can create an account with Neuer Capital to start trading cryptocurrencies and earning huge profits from them. If you understand the basics of cryptocurrencies and can find a way to stay updated with this market and its fluctuations, you could earn thousands and millions from it in no time.
Perhaps, you like to hold yourself accountable for the actions you take. If you are having a hard time deciding which cryptocurrency you should invest your money in, read about proof of work and proof of stake – that might solve the problem for you.