While on the surface PoW and PoS might seem like arbitrary distinctions and yet more crypto jargon to learn, what you'll soon find out is that PoW and PoS are fundamental to understanding how a blockchain functions and operates. But first...

What is a consensus algorithm?

PoW and PoS are simply ways for a blockchain to solve the problem of forgery. Everything digital can be effortlessly and systematically copied. From copying the text on this article to copying a PDF, duplicating anything digital is just a click away.

This becomes a problem when creating a currency. If anyone can make infinite copies than the whole system is worthless. In cryptocurrency this is called the double spend problem.
Consensus algorithms are simply the rules by which the participants of a blockchain agree that a transaction has been executed and solves the double spend problem.

Proof of Work (PoW)

Proof of work solves the double-spend problem through forcing miners to solve a difficult math problem and create a hash. To learn more about hashing and encryption read this article. Essentially this math problem can only be solved by the miner randomly guessing the solution. Whichever miner accurately guesses the solution gets rewarded in that cryptocurrency.

This creates an arms race between miners as each tries to out-guess each other by getting better hardware, more machines, and cheaper power. To create total havoc from being wrecked on the blockchain, the algorithm automatically increases or decreases the difficulty of the mathematical problem to keep the time for each block to be mined consistent.


  • Very expensive and difficult to break
  • Decentralized


  • Slow
  • Hard to scale
  • Energy Intensive

Proof of Stake (PoS)

Instead of requiring expensive power hungry hardware to validate transactions, PoS entirely removes the middleman. In PoS validators use their coins as collateral. The validator is selected quasi-randomly to validate a transaction. Once a validator is chosen, the other nodes takes turns validating (these are called witesses) and verifying that the first validator was correct. If they agree that the validator was wrong, then that validator loses all of their staked tokens.

Each PoS chain has a different implementation, but they all revolve around validators locking up their coins as collateral and voting on other blocks.


  • Fast
  • Energy Efficient


  • Relatively new and untested
  • Centralizes over time

What's the big deal?

PoS vs PoW completely change how it functions as well as risks associated with it. Attacking and changing a PoW blockchain will require you to have a monopoly on hardware (more than 51% of the computing power) where as PoS requires more than 51% of the money.

Next time you are researching a project, take the time to understand if it's using PoW or Pos.