Hello HODLers!

In this last period there is a lot of talk about consensus algorithms: the Ethereum blockchain is going through a phase of transition from a Proof Of Work (POW) consensus mechanism to a Proof Of Stake (POS) and in Europe and in the world there is talk much of the high energy consumption of POW systems.

Proof Of Work explained simple:
The term Proof-of-Work (PoW) indicates the consensus algorithm underlying a blockchain network. This algorithm is used to confirm transactions and produce the new blocks of the chain; PoW incentivizes miners to compete with each other in trade processing, receiving a reward in return. The miners solve the problem, start a new block and confirm all transactions within it.

The node that first solves the puzzle has the right to insert the block on the blockchain and gets a reward to incentivize the continuation of the work. Only in this way can a user be sure that all their transactions are included in the blockchain.

In proof of work, transactions are verified through mining:

- every time a transaction is sent, the network takes about 10 minutes to confirm it, and can handle up to about seven transactions per second.

- each block holds several transactions, which must be independently validated.

- miners, with higher computational performance, take one transaction at a time and solve a cryptographic algorithm, otherwise known as proof of work;

- the transaction, at this point is validated and published on the public blockchain for everyone to see;

- the fastest miners, the first to solve the algorithm, are rewarded in cryptocurrencies, that of using the blockchain on which they operate.

Proof Of Stake explained simple:
PoS has advantages over PoW: a fairer mining system, higher transaction scalability and mono energy consumption. On the other side of the coin, PoS systems are typically considered less secure than PoW consensus mechanisms. In fact, proof of work is not entirely perfect: not only high-capacity computers consume a large amount of energy to be efficient, but the number of transactions that can be processed at the same time is also limited.

The PoS protocol uses a different process to validate transactions and reach consensus. It is always a cryptographic algorithm, but the objective of the mechanism is different.
If the PoW rewards its fastest miner, in the PoS the miner who creates the next block wins the transaction in proportion to what he "staked", and there is no reward like in Bitcoin: simply the gain consists in the transaction commission.
Explaining better, the proof of stake model randomly chooses the winner based on the amount he has staked, and frozen in the blockchain.

How are transactions verified in the proof of stake?

- to validate the transactions, the user must insert their coins in a specific wallet;

- this wallet freezes the coins, and they are used to stake the network. Proof of stake protocol-based blockchains have a minimum participation requirement to start betting, which requires a large initial investment;

- at this point the possibility of winning the reward for the user is strictly connected to the total percentage of coins owned by the user;

If the PoW requires all miners to participate, with the highest chance of winning for the highest-capacity miners, the PoS protocol randomly chooses the winner based on the amount he has wagered, which is why if a counterfeiter tries to hacking the network or processing illegal transactions would lose the entire stake. The more stakes the more you earn.

I hope this in-depth study helps to understand the differences between the PoW and PoS consensus algorithms, for any doubts I am available, you can safely ask questions in the comments section below!

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