In this article we will tell you about the three "brothers": PoW, PoS and PoB. We will analyze which of them is stronger, who is smarter, and whether there is among them someone silly :)
Their full names are Proof of Work (PoW) - proof of the work done, Proof of Stake (PoS) - confirmation of ownership and Proof of Burn (PoB) - proof of combustion. If you are planning (or have already begun) to invest in the crypto currency, you need to get acquainted with these "brothers".
The essence of the Proof of Work algorithm
Initially, the idea to introduce a condition under which any abstract resource would become accessible only after the calculation of a certain super-complicated task was announced in 1993 by two developers, Moni Nauor and Cynthia Dvor, in a scientific article.
After 3 years, Adam Beck has released a project Hashcash - a system of proof of correctness of work, whose main goal is to reduce the amount of spam and DoS attacks. He described the invented algorithm as follows: "It is necessary to calculate the value of X, in which the function SHA (x) will contain nth number of zero bits".
And in 1999 Marcus Jacobsen and Ari Jules first introduced the notion of Proof of Work in their scientific article.
The Proof of Work concept is designed to protect the server from unwanted DDoS attacks and spam, with the help of the introduction of a special complex task, which can not be solved without the waste of a large amount of time and resources.
The essence of the POW algorithm's work is as follows:
:fulfilling a certain resource-intensive task.
:the ability to lightly check the result of the problem.
The execution of PoW tasks is initially not possible by a person, they are designed for computing. The computer solves a difficult task, but at the same time it consumes large computing power. And it takes a little time to check the result.
Let's explain the principle of the work of PoW in simpler terms, on the example of a school lesson:
The teacher of mathematics asked a difficult task with an asterisk for all students in the classroom (miner on the network), and promised to place a high price (reward for the mining) to the one who decides it first. A student (miner) must include all his potential (energy of computer technology) in order to produce mathematical calculations for the fast and correct solution of the problem.
Proof-of-Work and cryptocurrency protocol communication
Satoshi Nakamoto took as a basis the concept of Hashcash, c computed by the SHA-256 hash function, and added to it the variable complexity mechanism of the task, depending on the overall ability of the network participants. The difficulty level is recalculated every 14 days. If the miners succeeded in finding 2016 blocks faster than in two weeks, the complexity increases, if slower - the task becomes easier.
Simply put, the PoW mechanism allows the network node to check the actual execution of calculations by the miner. It is not possible to know in advance which of the miners will ultimately perform the task first. Moreover, being the first does not mean getting all the current reward for finding the block one (12.5 BTC). The fee is received by all the miners participating in the search for blocks, in proportion to their contribution.
The essence of the Proof of Stake algorithm
In 2011, at the BitcoinTalk forum, one of the users named QuantumMechanic suggested the idea of the POS algorithm. He introduced it as an alternative to the Bitcoin Proof-of-Work protocol used earlier in the blockchain.
When it is used, transactions are checked through the nodes in the network of the block system. Simply put, the more investor in the purse of the crypto currency, the faster he can find a new block, in order to confirm the authenticity of the transaction, and get for it also a reward.
A year later, the first crypto currency appeared on the protocol PоS-Peercoin. To be more precise, it used a "hybrid" protocol: PoW was used for the initial distribution of tokens, and after the extraction, the transition to PoS was implemented. NxT and Blackcoin became the first crypto currency with 100% consensus algorithm PоS.
The decisive factor in the Proof-of-Stake algorithm of who of the nodes will find the block first and will receive a reward for this is the stake size (Stake). Those. the first will be the one who has more coins in his wallet, and, accordingly, will receive more rewards for mining.
Advantages of Proof-of-Stake versus Proof of Work:
:POs requires far fewer resources to protect
:POs have a higher validation rate
:Transaction fees are lower in PoS networks
:The 51% attack is complicated in execution, as it becomes very expensive. But, even if the attack takes place - it will disrupt the network of the blocking system, and it will be difficult to extract from this benefit.
But, there is a Proof-of-Stake and a minus- is a potential collusion of a group of nodes, which can lead to a change in the rules of the block.
The essence of the algorithm of Proof of Burn
In addition to the two popular methods - PoW and PoS, there are a few lesser known alternative methods, one of which is Proof-of-Burn (PoB) - the proof of combustion.
The proof of combustion in the POB protocol is that the miners send coins to a special address that they "eat up" - they can not be returned or spent from there - this transaction is recorded in the block, as evidence of burning coins, after which the user is rewarded.
The idea of Proof of Burn is that by burning the crypto currency, the user demonstrates readiness for short-term losses for the sake of long-term investments. Remuneration consists in obtaining a lifelong right to mine, and the more a user burns coins, the more likely that he will be able to mine the next block. PоB can be realized in different ways, for example, in one case coins of the same currency are burned, which must be mined, in others - alternative. In addition, when using this algorithm, the stake of participants will eventually fade, as in the case of Bitcoin, where it is necessary to invest in more powerful equipment for mining. Here, in order to preserve the chance to be selected for the next block's mining, it is necessary to burn more coins, thus showing a long-term attitude.
There are also disadvantages of the PоB protocol:
Like the PoW protocol, proof of work execution, POB is associated with a waste of resources. In addition, those who are ready to burn more money are engaged in mining, and here there is a problem similar to the POS protocol - the proof of the share of ownership - the rich get even richer. Moreover, there is no guarantee that the investor will pay back the burning of coins, this is a risky investment.
To sum up:
Who is what "brother", among these three algorithms, you decide. Proof-of-Work and Proof-of-Stake are the two most popular protocols for reaching consensus among the crypto-currency lock-ups. Proof of Burn only aspires to the popularity of these two protocols. Do not forget that more and more often there are alternative protocols for crypto currency, with completely new concepts of the mechanism of consensus.
Original source:https://incrypted.net/beginners-review-algorithms-pow-pos-pob/