- Collaborative PoW that merges proof-of-stake and proof-of-work
Both PoS and PoW are consensus mechanisms for cryptocurrency nodes on the blockchain. The way the two consensus approaches work is vastly different.
In the PoW approach, the consensus is achieved when individual nodes generate the next block of the blockchain to validate a transaction by solving the cryptocurrency hash problem in operation called mining. The process of writing (creating) a new block on a blockchain can require significant computing power and energy consumption. Bitcoin creator Satoshi Nakamoto described poW in an early document published in 2008 that defined the Bitcoin model. It remains the consensus mechanism used by Bitcoin today.
With PoS, the consensus is reached by validators who provide a deposit known as a stake in the specific cryptocurrency used. PoS requires significantly less energy and computing power than the PoW approach. PoS is also faster than PoW and has the potential to provide more scalability because less computing power is required to achieve consensus and validate transactions. The Peercoin cryptocurrency group pioneered PoS in 2012.
- Advantages of Proof of Stake
The PoS consensus mechanism provides several advantages to the cryptocurrency platform that supports the approach, including:
• Resources to maintain validator status Less computing power required.
• The amount of energy consumed to validate transactions is correspondingly reduced due to the demand for less computing power.
• Using PoS, the block generation interval can be narrowed, resulting in faster transaction processing.
• PoS-based approaches can be more scalable than PoW as the requirements and resources to hold a stake may be lower than the hardware and energy costs of PoW.
- Problems with Proof of Stake
• The central promise of cryptocurrencies is that they are decentralized. Because proof-of-stake requires staking coins, there is the potential for large stakeholders to unduly influence the validation of transactions on a blockchain network.
• Staking pool nodes must keep their stakes tied up. PoS allows stakes to be tied to smart contracts for long periods.
• There are security concerns that PoS is less secure because it requires less validation effort and is likely to be affected by large stakeholder groups.
- Advantages of Collaborative PoW
• As long as the level of computing power required for verification node qualification is appropriate and the computing power of all verification nodes is maintained above the minimum level.
• Nodes participating in verification broadcast their minimum block hash value found within a given time slot, so the amount of energy consumed for verification is reduced to about 1% of PoW.
• The difficulty of finding the block hash value can be lowered, which reduces the block generation interval and speeds up transaction processing.
• Increase scalability.
• Nodes that want to participate in cooperative PoW require a stake only to verify their participation qualification, so all participating nodes require a minimum stake equal to the same coin. Therefore, it is a structure in which malicious participating nodes cannot influence the validation of transactions.
• It guarantees participation with a minimum stake for nodes wishing to participate in the verification, so there is no problem even if the stake is tied to the smart contract for a long time.
• Security issues are not likely to be affected by large stakeholder groups.
- Disadvantages of Collaborative PoW
The real-time issue is flexible about qualifying nodes participating in Collaborative PoW by staking. However, because the participating request messages for Collaborative PoW operation increase control traffic, the network load is partially increased.
In addition, each participating node finds the minimum block hash value every time slot and broadcasts a block hash message containing this block hash information to all nodes, adding network load.