PoS vs PoW – what’s the difference?Īt the time of writing, both Bitcoin and Ethereum are based on a Proof of Work consensus protocol, but Ethereum has laid out plans to upgrade its consensus mechanism to a Proof of Stake model, which will help to streamline the process and speed up the rate at which transactions can be completed and added to the blockchain. The two types of consensus mechanisms that you’ll commonly see referenced across the crypto industry as PoW and PoS, or Proof of Work and Proof of Stake. Consensus measures are in place to prevent this “51 percent attack.” Different approaches have been developed to address this security issue in various ways. By controlling 51 percent of the network, an attacker can theoretically compromise consensus. In a cryptocurrency system, a consensus mechanism also aids in the prevention of certain types of economic attacks. New consensus techniques have been developed in recent years to allow cryptoeconomic systems like Ethereum to agree on the state of the network.
These approaches have been used to achieve consensus among database nodes, application servers, and other enterprise infrastructure components for decades. That may sound complex, but what this means to you as a user is that your transactions are safe, secure, and confirmed every time you send or receive any digital currency. What is a consensus mechanism?īefore we look at how the different types of consensus systems in cryptocurrency work, we thought it would be best to give a basic introduction to the concept first.īasically, it’s a collection of rules, initiatives, and incentives that enable nodes within a blockchain to reach agreements regarding the network. There are a few different types of technology and validation mechanics that are used, each with its advantages and drawbacks – in today’s article, we’re going to take a look at each of these, explaining the subtle differences and what this means for the currencies that use them.īefore we dive into Proof of Stake, the importance of consensus mechanisms and more, be sure to check out the rest of our introductory guides here on the BCB Group website! We’ve got everything you need to get started on our Insights page, so we’re sure you’ll find exactly what you’re looking for in no time!įor a chat with a member of our expert team, simply fill out our online contact form and we’ll get in touch with our best solutions to help you access crypto-friendly business accounts and provide a centre for all your payment needs and trade & source liquidity. Once you’ve gained a basic understanding of the most common types of cryptocurrency, such as Ethereum and Bitcoin, the next step is to begin to look at the technology behind these digital currencies. With more people becoming involved in the crypto industry each day, experts need to be giving clear, accurate, and reputable information that helps new users to better understand the assets that they’ll potentially be investing in.
But very few resources seem to have the answer. Ethereum’s planned move to PoS has got most of us asking, “what is Proof of Stake?”.
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