Crypto Basics: What Are Proof Of Stake (PoS) & Proof Of Work (PoS)? - Kakiforex.com - Financial Market Media No. 1 in the World Crypto Basics: What Are Proof Of Stake (PoS) & Proof Of Work (PoS)? Crypto Basics: What Are Proof Of Stake (PoS) & Proof Of Work (PoS)?

May 31, 2021

Crypto Basics: What Are Proof Of Stake (PoS) & Proof Of Work (PoS)?

 Of late, the issue of energy consumption in the crypto sector has become a hot topic. Due to that, the our Team this time will provide a brief explanation on Proof of Work (PoW) and Proof of Stake (PoS) - what they have to do with the use of energy in crypto mining.


Proof of Work (PoW)


The first consensus mechanism introduced

Synonymous with Bitcoin (BTC) and Ethereum (ETH) mining

After being introduced by Satoshi Nakamoto in the Bitcoin Whitepaper in 2008, this mechanism dominated the crypto sector.

The process of this mechanism is simple: The miner validates several sets of transactions and adds blocks to the blockchain before being rewarded.

Limited in terms of speed and scale because the process requires energy. Again, PoW networks are coded to be less or more difficult compared to the amount of computing power.

Annual rate of electricity consumption in Bitcoin mining recorded by the Cambridge Center for Alternative Finance (CCAF): 110TWh, 0.55% of worldwide electricity generation, or the equivalent of annual energy consumption for Malaysia or Sweden.

The annual rate of electricity consumption in Ethereum mining recorded by EthereumEnergyConsumption.com: 48.37TWh, equivalent to energy consumption for Iraq.

Proof of Stake (PoS)



Created in 2012 by Scott Nadal and Sunny King as an alternative to PoW.

Peercoin is the first blockchain project to use the PoS model.

Solana (SOL), Binance Coin (BNB), Cardano (ADA), Polkadot (DOT), Tezos (XTZ), and Stellar (XLM) are among the well -known to use this system.

As of April 2021, Ethereum is rumored to be in an effort to migrate using PoS via an Ethereum 2.0 upgrade.

The process of the mechanism depends on the number of coins owned to validate the block. Simply put, the probability of validating a block depends on how many coins you have.

PoS is faster and more efficient than PoW systems.

seekingalpha.com revealed the Cardano uses only 0.00052TWh, while the Tezos is said to use 10.5MWh of energy per year.

This is new in terms of electricity consumption. In such a record of consumption, imagine the carbon emissions produced.


Because of that, Tesla decided to postpone the use of Bitcoin as a medium of payment as Elon Musk saw this as not giving good results to the environment.


In fact, recently the figure has been working hard to ensure that the production of Bitcoin and Dogecoin is more environmentally friendly.