I have loved the ethereum ecosystem ever since its inception. Sadly I have not yet gottent the opportunity to do any mainstream project on it other than some code labs for practice. We are living in wonderful times, we have witnessed a true transiton in the that breaks a monopoly and makes the system more fair. Allow me to explain in a few lines.
The Ethereum network is a decentralized blockchain that allows for the creation of smart contracts, decentralized applications (Dapps), and other decentralized applications (dapps). The network has two types of consensus: Proof of Work and Proof of Stake.
Proof of Work (PoW) is a system in which miners compete to be the first to solve a hash problem and earn the right to add a block to the chain. Miners are rewarded with ether for their work.
Proof of Stake (PoS) is a system where users who hold tokens on their Ethereum wallets earn interest for their holdings through transaction fees. Users can also choose to stake their currency, which means they lock up their funds as collateral until they receive more tokens than they’ve staked. This means that users essentially lend their money to people who have asked them if they want to use it as collateral while they mine new ether or look for blocks to win rewards from mining pools.
To summarize here is a little matrix:
| Proof of Work | Proof of Stake |
|---|---|
| Miners compete to solve a hash problem and earn the right to add a block to the chain | Users who hold tokens on their Ethereum wallets earn interest for their holdings through transaction fees |
| Miners are rewarded with ether for their work | Users can also choose to stake their currency, which means they lock up their funds as collateral until they receive more tokens than they've staked |
| Requires a lot of compute power | Does not require a lot of compute power |
Photo by Nenad Novaković on Unsplash
