AI Trading

In the cryptocurrency trade, Proof of Work and Proof of Stake are considered as two common consensus protocols that help in validation of the transactions being carried out over the blockchain. The Proof of work protocol is actually related with the use of computing power of hardware devices to solve complicated mathematical equations.

On the other hand, Proof of stake involves the validation of transactions of the blocks added to the blockchain. This is done by staking the digital coins by the miners.

Both Proof of work and Proof of stake have their own pros and cons. This article will comprehensively explain the importance and usage of both the protocols in a particular ecosystem.

Types of Existing Nodes

AI Trading

Proof of work and Proof of stake are the common types of existing nodes. Though with time many other consensus mechanisms are also coming forward but these two are still the most commonly used ones.

It’s been long ago, the Bitcoin and Ethereum have been using the Proof of work protocol to operate their blockchain networks. The miners have the responsibility to secure and validate the network and they are paid coins as the rewards of their services. But the Proof of work protocol has also been criticized by the experts as it consumes a lot of energy and time.

The hardware devices that are used for solving the equations are also having adverse impacts on the environment. The miners have to invest a lot of amount in buying the hardware with effective computing power that could solve the mathematical equations in lesser time than others. A device with larger computing power means larger electricity consumption that results in high electricity cost.

Proof of stake, however, provides an environment friendly opportunity to the users. The validators replace the miners in this approach. The experts are of the view that the Proof of stake consensus consumes 99% lesser energy then the Proof of work protocol. But at the same time, they have a fear that using the Proof of stake protocol will cause security issues and centralize the whole mechanism.

Ethereum is planning to upgrade its blockchain network and after the Merge, it is shifting to Proof of stake protocol from the currently operating Proof of work mechanism. The professionals are looking forward for the results of this experiment and if proves fruitful, it would be a great success in the blockchain technology.

Another protocol is also emerging on the screen known as Published Proof of contribution (PPoC). According to this mechanism, the developers are ensuring that the blockchain environment is governed well, democratic and decentralized. For this purpose, every individual has to play the role on his part.

What is Proof of Work (PoW)?

The Proof of work protocol works as the miners have to solve the complex cryptographic mathematical equations using the computing power of the hardware devices. For this purpose, the miners use highly powered computers and using the trial-and-error method, they try to solve the problems.

There are a number of miners competing over the blockchain to solve the problem. The one who solves the problem before the others gets a chance to add up a block to the blockchain system that could help in carrying out the transactions. The digital currency is then added to the blockchain when a block gets validated by a miner. In return, incentives are also paid to the miner for solving the cryptographic problem.

To compete effectively and to solve the problem before other miners, it requires one to have fast computers that have high computing powers. With the growing network of the cryptocurrency, the higher demand of energy and power may result in the increase the time required for each transaction.

What is Proof of Stake (PoS)?

Before starting validation of any transaction with Proof of stake, the miners have to invest a little in the digital currency. The miners are required to stake the coins of their own choice in order to add a block in the blockchain. The capacity of staking for a miner also depends on the time they have been staking for. The number of coins chosen for mining adds up to the mining power. The more the number of coins chosen, the more is the mining power.

Using a weighted algorithm based on the experience of the validator and the amount of stake, the validator of the transaction is chosen randomly. After the verification, the block is then added to the blockchain network. If the verification of the block is done in a wrong manner, it may result in the loss of coins. Staking the currency adds a layer of security to the currency as the coins cannot be stolen or scammed by anyone else.

The main purpose of the creation of proof of stake was to provide an alternative to proof of work. Both of these mechanisms differ in scalability, consumption of energy and effects on environment.

Efficiency of The Consensus Mechanisms

The effectiveness and efficiency of these consensus mechanisms can be measured by the following factors mentioned below.

  • Gas Fee

When the market is running smoothly at the time of the bull market, the gas fee hikes for the blockchains that use Proof of work protocol. This means it will result in increase of the charges required for carrying out a transaction.

  • Time Required for Confirmation of a Block

It is observed normally that Proof of work mechanism requires about 10 minutes to finalize a block though depending on the ability of mining, this time can fluctuate. On the other hand, if using the Proof of stake mechanism, a validator is chosen randomly after every 12 seconds to create a block.

There is always a risk attached in using both these protocols. The hardware device used for mining and the amount of crypto staked matters a lot. The miner who stakes more crypto and has a better device has more chance of winning the reward. In PPoC, each of the node is rewarded equally as this protocol helps in mining and adding a block to the network every two seconds. Therefore, each participant is paid according to the contribution he makes to mining.

  • Scalability

Using the Proof of work mechanism, it usually becomes difficult to carry out multiple transactions at a time as they cause congestion in the network. Ethereum however, is now shifting its direction to Proof of stake consensus after the Merge to achieve the scalability demands of the public. This will help in the reduction of time required for carrying out the transactions as well the transaction charges could also be controlled.

Hurdles in the Way of Validating Transactions

Using the Proof of work and Proof of stake consensus mechanisms over the blockchains could result in a number of difficulties for the users and the developers.

Investing in the mining process and earning a considerable profit is not that easy in crypto mining. The competition is increasing day by day and the miners are trying to use the most effective hardware in order to compete with others. The struggle for buying better equipment, adjusting the electricity costs in the inflation era and wide range of resources has put the miners in a state of awe.

Moreover, the rewards that the miners earn as incentives of their services are also made half after every four years. The developers fear that may be in future they will reach a situation where the expenditure on the mining requirements will increase than the profit that they will earn from it.

The proof of stake consensus has its own challenges for the users. Ethereum has upgraded its network where the validators at the nodes have to stake about 32 ETH for adding each block. If the cost is considered, it comes out to be about thousands of dollars that would become difficult for a usual consumer to afford. If one seeks the help of the central authorities for staking the currency, this could help him gain exposure in the market with lesser expenditure costs.

But centralizing the blockchain network is not a trustworthy approach. The consumers could find some other better ways of cutting down the expenditure while earning good profit amount. There are some blockchains that provide the opportunity of using the masternodes that are blended together and validator nodes. The masternodes are regulated by the higher central authority and all the wallet holders could mutually share the validator nodes.

The Published Proof of contribution mechanism is used to verify the nodes using the node representatives. This helps the consumers in a way that it does not require them to look after the processes running over the blockchain but at the end, they are still paid incentives for their staking services.

Downsides of Proof of Stake Protocol

The Proof of Stake mechanism, though approved by majority of the consumers still have some flaws that need to be fixed. Some of them are explained below.

  • Initial Investment

The main problem with using the Proof of stake consensus on the blockchain is that it requires a high initial investment. In order to become a validator, the consumer should own a considerable amount of cryptocurrency. The amount of the currency needed initially depends on the size of the network. But the consumer must be rich enough to own a lot of crypto so that he can stake it. However, in case of inflation, it could become difficult for someone to own a large amount of currency.

  • Problems of Governance

In the blockchains using Proof of stake as consensus mechanism, the owners of the token have the control over the complete network. By staking the currency they can collect more tokens easily. This makes the network centralized, handing over the control in the hands of the owners and firms who stake the funds and tokens.

  • Fear of Scam

The Proof of stake mechanisms are more vulnerable to attack as they make the systems comparatively centralized by handing over the authority in the hands of a single entity. The hackers and cybercriminals could easily find out the real owners of the system making it easier for them to attack.

Advantages of Proof of Stake Protocol

There are also multiple advantages of using the Proof of Work consensus mechanism as it facilitates the transactions by making them faster and smoother. The scalability of this protocol is large enough to meet the demands worldwide. Moreover, it uses comparatively lesser energy than the Proof of Work mechanism.

Downsides of Proof of Work Protocol

Proof of Work has certain drawbacks and flaws that become major hurdles for the consumers. Some of the problems are mentioned below.

  • Consumption of Energy

A large amount of energy is required to carry out the transactions in the Proof of work consensus mechanism. The miners have to spend a lot of money to buy the hardware that own high computing power and could run effectively. However, such equipment also consumes a lot of energy and also make the environment polluted. Therefore, the use of Proof of work protocol makes the environment less user friendly.

  • Hardware Requirements

The miners are required to use hardware other than normal desktops or computers to compete with other miners. As the Proof of work mechanism requires high computation power to solve the cryptographic mathematical equations.

  • De-Facto Centralization

As the competition among the miners to earn the rewards on the blockchain is getting intense day by day, some of the experts are of the view that there are some mining pools on the blockchain that are controlling the blockchain activities. This is making the blockchain slightly centralized.

These mining pools consists of individuals and smaller mining pools that participate contributing their hash power to the system. In case of nay disagreement, they can pull of their hash power from the larger pool.

Advantages of Proof of Work Protocol

Some of the pros of using PoW are that it has the capacity to be decentralized ensuring the security of the transactions. As the PoW requires multiple validations to process a transaction by a number of computers and users across the network that review and approve it before reaching the final stage.

Benefits of Using PPoC Protocol

In addition to its benefits in the staking process, the use of Published Proof of contribution (PPoC) protocol in the blockchain could help in turning the idea of cryptocurrency as daily life payment method into reality. The blockchains that are using Proof of work as the consensus mechanism need a number if confirmations before finally carrying out a transaction.

This could often result in frustrating the consumers as being highly volatile, the value of the crypto assets could even fluctuate in that minor period of time.

Moreover, in order to carry out a transaction immediately, one has to use his intuitive powers to pay the gas fee. If one pays very less amount, the miners may ignore the offer and keep you awaiting in the pool, concentrating on the ones that could make them earn more profit.

If one pays a very large amount, it could be a wastage of cryptocurrency being earned over minor petty issues. Therefore, one has to be vigilant before deciding the suitable amount of gas fee.

Using the PPoC protocol such as Eurus helps the blockchain network to overcome the hurdles imposed by the Proof of work and Proof of stake mechanisms. It does so by making the transactions possible within 2 second time period. Moreover, it does not consider any threshold factors of the miners to carry out the transactions.

Some of the other pros of using the PPoC protocol is that the transactions on the blockchain can be completed easily within time. In addition to that, it also provides transparency and security to the blockchain by using an advanced block search engine.

Working of Eurus

Eurus uses the sidechain technology to form the layer 1 blockchain. It does so by using an interconnected bridge that helps to integrate the mainnet of Eurus with other networks or Ethereum. Eurus was found with the purpose of facilitating the consumers by providing them the opportunity to carry out faster crypto transactions and pay their charges easily.

Moreover, it also facilitates the connection between the major blockchains, helping them to interact with one another easily. It is also trying to sort out the major drawbacks found in some of the major blockchain networks. Some of them are the longer time taken by the transactions and the higher charges of the gas.

The developers are struggling hard to facilitate their consumers in the best way possible by solving the main hurdles in the way and providing them a fair and transparent network to carry out the transactions easily.


It is important to understand that every system has its own flaws. No system designed by humans could provide 100% efficiency. Both Proof of work and Proof of stake have their own pros and cons. All it depends on the consumer’s budget, the mining environment and the electricity cost that which consensus mechanism fits the situation in the best manner.

AI Trading produces top quality content for crypto companies. We provide brand exposure for hundreds of companies. All of our clients appreciate our services. If you have any questions you may contact us. Cryptocurrencies and Digital tokens are highly volatile, conduct your own research before making any investment decisions. Some of the posts on this website are guest posts or paid posts that are not written by our authors and the views expressed in them do not reflect the views of this website. Herald Sheets is not responsible for the content, accuracy, quality, advertising, products or any other content posted on the site. Read full terms and conditions / disclaimer.

Nathan Ferguson

By Nathan Ferguson

Nathan Ferguson is a talented crypto analyst and writer at Herald Sheets, dedicated to delivering comprehensive news and insights on the ever-evolving digital currency landscape. With a strong background in finance and technology, Nathan's expertise shines through in his well-researched articles and thought-provoking analysis. He holds a degree in Economics from the University of Chicago, and his passion for cryptocurrency drives him to stay up-to-date with the latest industry trends and developments.