Every cryptocurrency has a number of essential properties, such as price (pegged to USD or BTC), issuance rate, total supply, total amount in curculation and trading volume, among others. When describing a crypto coin to a non-technical person or someone more interested in the economic aspect, it does make sense not to specify what the consensus protocol is - proof-of-work (PoW) or proof-of-stake (PoS).
Truth is, there are a number of other consensus protocols but they are either a combination between PoW and PoS or are not popular enough to consider. Now, let us examine the basic differences between the major blockchain consensus methods:
| Proof-of-Work | Proof-of-Stake | |
|---|---|---|
| coin allocation | to "miners" who solve a cryptographic puzzle | percentage allocation to those having a set minimum of coins |
| reward | per block + transaction fees | transaction fees only |
| hardware cost | considerable + ongoing expenses (electricity and wear) | minimial, not always required |
| functions | SHA256, Scrypt, Blake-256, CryptoNight | none as such, there is a definition of interest rate |
| notable coins | BTC, BCH, NMC | NAV, NEO, POS (PoSToken) |
To me, the most notable examples from both categories are Bitcoin (BTC) and Neo (NEO). There is a new kid on the block, also - POS token. It is worth noting that POS is an Ethereum-based token, which means that a smart contract governs the staking logic. On the other hand, NEO for example, has its own blockchain.
By no means, this comparison is exhaustive enough. In future articles I plan to go into more detail about what is worth staking. My goal was to inform people that interest rates have a huge competitor in the face of Proof-of-Stake coins. So it is not a surprise that there is a growing percentage of investors whose portfolio is predominantly comprised of different cryptocurrencies.