Consensus Mechanism: How does Proof of Work and Proof of Stake Differ?

By Pratiksha Bhapkar
9 Min Read

Proof of Work is the earliest consensus mechanism used by older cryptocurrencies such as Bitcoin and Ethereum 1.0. Whereas Proof of Stake is comparatively recent and is used by cryptocurrencies such as Ethereum 2.0, Tezos, and Cardano. It is critical to understand the differences between them in order to select which one best fits your requirements to make an informed investment.

For many years, Proof of Work (PoW) ensure records’ legitimacy. However, in recent years Proof of Stake (PoS) has become a popular consensus mechanism. These two mechanisms have some similarities, but not all methods are built the same way, so they also have many differences. But first, it’s essential to understand what is a consensus mechanism.

Introduction to the Consensus Mechanism

The consensus mechanism is also known as the fault-tolerant mechanism used in blockchain systems, where all the members of a distributed network come to a mutual agreement about the state of the network. Simply put, it’s a collective decision-making process where all the network participants have to agree on a single outcome. It promotes trust and collaboration between participants as well as contributes to a secure, private, and reliable transaction.

Learn the essential steps to successfully list your crypto token on an exchange and navigate the process effectively with this comprehensive article.

There are various types of consensus mechanisms in use. In this blog, we will understand two mechanisms proof of work and proof of stake. And will explore the key differences between them in order to help you understand why one may be preferable.

Proof of Work

The proof of work consensus mechanism confirms transactions and produces as well as adds new blocks to the blockchain. Here miners must solve complex mathematical problems to generate a hash that meets specific criteria. The first miner who solves the problem, their block is added to the blockchain, and the individual receives newly minted coins as a reward. This process is known as “mining”.

Learn about the intricate workings of cross-border payments in 2024, unraveling their mechanism and intricacies, all within this comprehensive article.

The Proof of Work algorithm prevents the blockchain network from the attack of malicious actors. It requires a significant amount of computing power and time to solve the mathematical problem. It’s difficult and expensive to launch an attack on the network as well as successfully alter or reverse transactions.

Proof of Stake

The proof of stake (PoS) consensus mechanism in blockchain technology, secures networks and validates transactions. 

In a proof of stake system, the validator of a transaction is determined by the amount of cryptocurrency or tokens held by an individual. The more cryptocurrency or tokens a validator holds, the more likely they are to be the validator for a given transaction. This is “staking,” similar to how shareholders in a company have voting rights. Handling transactions can be quick and efficient with minimal risk of fraud due to the deterministic selection of the validators.

Learn about the threats posed by a 51% attack on the blockchain and how to mitigate risks with this comprehensive article.

The Distinction Between Proof of Work and Proof of Stake

The major difference between the two is that PoW needs miners to solve complicated hash puzzles. Whereas, in PoS need participants to stake their coins.

In a PoW blockchain network, miners require to compete with each other to be the first ones to solve a complex mathematical problem to produce a new block. The miners receive cryptocurrencies as a reward for their effort. Whereas in a PoS blockchain network, validators are selected randomly based on the number of crypto or tokens they have staked. The selected validators then validate transactions and produce new blocks. 

Discover the nuanced disparities between crypto trading and investing, gaining valuable insights and clarity on each approach with this comprehensive article.

The advantage of is that PoS does not require miners to utilize computer resources. Thus, it requires less energy consumption in comparison to PoW. Plus, it is also much more secure than PoW since it requires validators to stake their coins, this means they must behave honestly or else they will lose their stake. PoS is also comparatively faster than PoW because it takes much less time to select validators and validate blocks.

Discover the top 10 staking platforms for Tezos (XTZ), each offering unique features and benefits, providing invaluable insights and guidance with this comprehensive article.

Proof of Work and Proof of Stake are vulnerable to 51% attack. The cryptocurrency with the highest hashing power is less likely to suffer a 51% attack. As per, Bitcoin has the highest hash rate of 255,998 PH/s, which is why it’s one of the safest cryptos from a 51% attack. PoW requires 51% of the computer power, and PoS need 51% control of stake, which is difficult to obtain. Thus, PoW is comparatively more prone to 51% attack.

Proof of WorkProof of Stake
The amount of computing work a miner does affects the likelihood of mining a block.The amount of stake a person possesses determines the likelihood of validating a new block.
The first miner to solve each block’s cryptographic problem receives a reward.The validator does not receive a block reward; instead, they receive a network charge.
To add a malicious block, the hacker would require 51% of the computer power.To add a malicious block, the hacker would need to control 51% of the cryptocurrencies on the network, which is unlikely to happen.
This is more costly as it requires specialized equipment to increase processing power.Comparatively less costly as it requires just a standard server grade unit is more than sufficient.
Bitcoin is the most popular cryptocurrency using a Proof of Work consensus-building algorithm which uses a Proof of work function called SHA256.Examples of some of the cryptocurrencies that use variants of Proof of stake consensus are Solana, Tezos, Cardano, and Cosmos.
Proof of Work vs Proof of Stake

Which Consensus Mechanism to Choose?

A consensus mechanism is a vital part of any blockchain technology as it ensures a secure as well as a reliable distributed system.

Select the consensus mechanism that best fits the network based on the project’s requirements. The proof of work consensus mechanism is suitable for high-security projects like Bitcoin. Whereas, proof of stake is ideal for projects where scalability and transaction speed are priorities.

Explore the intricacies of the Shiba Inu Ecosystem and gain insightful analysis to navigate its depths effectively with this comprehensive article.

PoW and PoS both consensus mechanisms that have their own pros and cons, and can secure a blockchain network. The final decision should depend on the type of project and its specific requirements.  


To make informed decisions it’s essential to learn about different consensus mechanisms available on the market. Furthermore, the cryptocurrency industry keeps on evolving, so there are chances of development of many new solutions or updates on existing solutions. Thus, it’s important to do your research and understand different consensus mechanisms to choose the best one that suits your needs.