My Blockchain Primer

Consensus mechanisms

Proof-of-Work and Proof-of-Stake?

It is (financially) cheaper to attack a proof-of-stake system as attackers do not face technological or economical disincentive.

In earlier sections, we mentioned about proof-of-work which miners performs expensive computer calculations to solve a block (and get the block rewards). Proof-of-work is just one of the distributed consensus mechanisms.

Proof-of-stake is another distributed consensus mechanism. In proof of stake, a Turing-complete or deterministic algorithm is used to validate each transaction and block. There are no block rewards and miners get the transaction rewards instead.

Comparing between proof-of-work and proof-of-stake, one glaring difference is that less computational power is required in a proof-of-stake system. It is also means that it is (financially) cheaper to attack a proof-of-stake system as attackers do not face technological or economical disincentive. Malicious actors can more easily perform a 51% attack on a proof-of-stake system.

Hence, the algorithm used in a proof-of-stake system needs to be as bulletproof as possible to cut out malicious actors.

 

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