Proof of work and proof of stake
The two main ways blockchains agree on new blocks, how they are secured and what their trade-offs are.
A blockchain needs a way for thousands of independent computers to agree on which block comes next, even if some participants are dishonest. This is called a consensus mechanism.
Proof of work
In proof of work, miners compete to solve a computational puzzle. Finding a solution takes a lot of computing power, but checking it is easy. The winner adds the block and receives a reward.
- Security: to rewrite history, an attacker would need more computing power than the rest of the network combined.
- Cost: mining uses a lot of electricity and specialised hardware.
- Examples: Bitcoin, Litecoin, Dogecoin, Bitcoin Cash.
Proof of stake
In proof of stake, validators lock up (stake) coins as collateral. The protocol selects validators to propose and confirm blocks. Validators who act dishonestly can lose part of their stake ("slashing").
- Security: an attacker would need to control a large share of the staked coins.
- Efficiency: uses far less energy than mining.
- Examples: Ethereum, Cardano, Solana, Polkadot, Cosmos.
Variants
- Delegated proof of stake — holders vote for a small set of block producers (for example, TRON's Super Representatives).
- Nominated proof of stake — holders nominate validators they trust (Polkadot).
- Federated or voting-based protocols — validators agree in rounds (XRP Ledger, Stellar).
Finality
Finality is the moment when a transaction can no longer be reversed. In proof of work, finality grows with every new block (probabilistic). Many proof of stake networks reach finality after a fixed number of rounds.
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