UNIVERSITY OF ABUJA
FACULTY OF ART
GROUP L
CSC200
INTRODUCTION TO COMPUTER SCIENCE
RESEARCH TOPIC:
PROOF OF WORK AND PROOF OF STAKE
GROUP MEMBER
1. Nwaka Chibuikem OralGrandeur – 21/202ENG/394
11.Ojeniyi Favour Oluwaferanmi -21/202Eng/327.
21:Luka yellawos Henriata -21/202THA/246
31:Obeta Faith Chinonzo 21/202eng/414.
51. Shedrack Sharon Barachia -21/202Eng/392
61: Nzeh Emmanuel-21/202tha/213
81 Aliyu Rukayat Danladi 21/202ENG/345
91.Erubami Mubaraqat Ayinke -21/202lin/332.
101. Ijwoh Peace Akwa-21/202LIN/ 295
111. AbdulRasheed AbdulLateef Ifeoluwa- 21/202LIN/284
131.Obera Wealth 21/202ENG/307
141: AFOLAYAN MOSES OLUWAFEMI -21/202THA/313
151. Daniel Gbenga 21/202Eng/360
161. Abdullahi Fauziyya-21/202ENG/380
171. Jamiu Aishat Oluwafeyiponmile- 21/202LIN/360
191. Animashaun Mulikat Aramide- 21/202LIN/289
9 Iroroavwodia faith 21/202ENG/317.
19 Idris Hanifah Oyiza 21/202THA/234
29 Adams Hannah Hassan 21/202ENG/328
39 idris bashir 22d/202ENG /613
49 Mustapha Grace Eniola 21/202ENG/389
59 Raji Qowiy abiodun 21/202ARB/021
69 Adenariwo Ruth Olatomiwa 21/202ENG/330
79 Suberu favor ohunene -21/202lin/317
89 Abba Precious Sanom 21/202ENG/361
99 Hope Nkechi Chijioke 21/202ENG/362
109 Olabisi Mary odunola 21/202LIN/350
119 Okosun John-Vianney E 21/202THA/211
129 Divine Daniel 21/202LIN/261
139 Edward deinmo Amienyo 21/202tha/318
149 Jimoh Abdul basit adavudi 21/202eng/474
159 ADEBISI BUSAYO GLORY 21/202ENG/390
169 Eromoseie Precious Happy 21/202ENG/419
179 Richard Isaac 21/202THA/240
189 Ekpe Emma Dominic 21/202Eng/338.
TABLE OF CONTENT
1. What is Proof of Work
2. What is Proof of Stake
3. Difference between Proof of Work and Proof of Stake
4. What are Consensus Mechanisms
5. What are Blocks in Consensus Mechanisms
6. What is Blockchain
7. How to make money with Proof of Work
8. How to make money with Proof of Stake
9. What is ASICS
10. Conclusion
WHAT IS PROOF OF WORK
Proof of Work (PoW) is a consensus mechanism used in blockchain networks to
validate and confirm transactions and maintain the security and integrity of the
blockchain. It is commonly associated with cryptocurrencies like Bitcoin. In a PoW
system, miners compete to solve a complex mathematical puzzle or algorithm. To
do this, they expend computational power by performing numerous calculations
until they find a solution that meets certain criteria. This process is resource-
intensive and time-consuming. Once a miner discovers a valid solution, they can
broadcast it to the network, and other participants can easily verify its correctness.
The solution serves as proof that the miner has done the necessary computational
work. In the context of cryptocurrencies, the solution is usually a "hash" or a unique
digital fingerprint of the block's data. The first miner to solve the puzzle and provide
proof of work is rewarded with newly minted cryptocurrency units or transaction
fees. This process is often referred to as mining. Additionally, the confirmed block
is added to the blockchain, forming a sequential chain of blocks, each containing a
set of validated transactions. The difficulty of the mathematical puzzle adjusts
dynamically to ensure that, on average, a new block is added to the blockchain at a
fixed rate, typically every few minutes. This feature helps maintain the security of
the network by preventing malicious actors from overpowering the system. By
requiring substantial computational effort, proof of work makes it difficult and
expensive to attack or manipulate the blockchain. It provides a decentralized and
trustless consensus mechanism that enables the network to reach agreement on the
order and validity of transactions without relying on a central authority
WHAT IS PROOF OF STAKE
According to mckinsey.com, a proof of stake(PoS) is a consensus protocol in block
chains. This has a lot to do with consensus mechanism, which is essentially the way
users of a blockchain agree on transaction history, present and future. Proof of Stake
(PoS) is a consensus mechanism used in blockchain networks to achieve distributed
consensus and validate transactions without relying on energy-intensive mining
processes. Unlike Proof of Work (PoW), which is used in Bitcoin, where miners
solve complex mathematical puzzles to validate transactions and add blocks to the
blockchain, Proof of Stake relies on validators who are chosen to create blocks based
on the amount of cryptocurrency they hold and are willing to "stake" or lock up as
collateral.
In a PoS system, validators are selected to create new blocks and validate
transactions based on their stake or ownership of the cryptocurrency native to the
blockchain. The higher the stake held by a validator, the higher the chance they have
to be chosen as the block creator. This process is often referred to as "forging" or
"minting" instead of mining.
Validators are incentivized to act honestly and in the best interest of the network, as
they have their stake at risk. If a validator attempts to validate fraudulent transactions
or behaves maliciously, their stake can be "slashed," meaning a portion or all of their
stake can be confiscated as a penalty. This penalty mechanism helps ensure the
security and integrity of the network.Proof of Stake offers several potential
advantages over Proof of Work, including energy efficiency. Since PoS does not rely
on extensive computational work, it consumes significantly less electricity, making
it more environmentally friendly. Additionally, PoS systems can achieve faster
transaction confirmation times and potentially higher scalability, as they don't face
the same limitations as PoW in terms of block size and block time.
Many blockchain projects have adopted or are considering adopting PoS or hybrid
consensus mechanisms that combine PoS and PoW to enhance network security and
performance. Some well-known blockchains that use or plan to use PoS include
Ethereum 2.0, Cardano, and Tezos
DIFFERENCE BETWEEN PROOF OF WORK AND PROOF OF STAKE
Proof of Work (PoW) and Proof of Stake (PoS) are two different consensus
mechanisms used in blockchain networks. Here are the key differences between the
two:
1. Resource Consumption: PoW requires significant computational power and
energy consumption to solve complex mathematical puzzles and validate
transactions. Miners compete to find the solution, and the first one to solve it gets to
add the next block to the blockchain. In contrast, PoS relies on the concept of staking,
where validators lock up a certain amount of cryptocurrency as collateral to be
eligible for block creation and transaction validation. PoS is more energy-efficient
since it doesn't rely on extensive computational work.
2. Block Creation: In PoW, miners compete to solve puzzles, and the one who finds
the solution creates the next block. The probability of finding the solution is
proportional to the miner's computational power. In PoS, validators are chosen to
create blocks based on the amount of cryptocurrency they hold and are willing to
stake. The selection is often based on a combination of factors like the stake amount
and randomness, giving more weight to validators with larger stakes.
3. Security: PoW is known for its strong security due to the significant computational
power required to overpower the network. Attacks would require controlling over
50% of the network's mining power, known as a 51% attack. PoS aims to achieve
security through the economic incentives of validators. If a validator behaves
maliciously or tries to validate fraudulent transactions, they risk losing their staked
funds, which acts as a deterrent. However, the security of PoS networks depends on
the distribution of wealth and the mechanisms in place to prevent concentration of
power.
4. Scalability: PoW blockchains face scalability challenges due to limitations on
block size and block time. As the network grows, the number of transactions that can
be included in a block becomes a limiting factor. PoS networks can potentially
achieve higher scalability since block creation is not based on computational work
but rather on stake ownership. This allows for faster transaction confirmations and
the possibility of larger block sizes.
5. Network Decentralization: PoW networks are often more decentralized because
anyone with the required computational resources can participate in mining.
However, as mining becomes more specialized and centralized, concerns arise about
the concentration of power among a few large mining pools. PoS networks, on the
other hand, can face challenges related to the concentration of wealth, as validators
with larger stakes have a higher chance of being selected for block creation.
However, some PoS designs aim to mitigate this by implementing mechanisms like
coin age or delegation to enhance decentralization.
It's important to note that both PoW and PoS have their own strengths and
weaknesses, and various blockchain projects are exploring hybrid consensus
mechanisms and other alternatives to address the limitations of each approach
WHAT ARE CONSENSUS MECHANISMS ?
Consensus mechanisms are protocols or algorithms used in blockchain networks to
achieve agreement or consensus among participants on the validity and order of
transactions. Consensus mechanisms ensure that all participants in the network reach
a common understanding and agree on the state of the blockchain.
In a decentralized and distributed network like a blockchain, where multiple nodes
or computers participate, consensus is essential to maintain the integrity, security,
and immutability of the data stored on the blockchain. Consensus mechanisms
enable trust and coordination among participants without relying on a central
authority.
Here are a few popular consensus mechanisms:
1.Proof of Work (PoW): In PoW, miners compete to solve complex mathematical
puzzles using computational power. The first miner to find the solution adds the next
block to the blockchain and is rewarded with cryptocurrency. This mechanism
requires significant energy consumption and computational resources. Bitcoin uses
PoW as its consensus mechanism.
2.Proof of Stake (PoS): In PoS, validators are chosen to create new blocks and
validate transactions based on the amount of cryptocurrency they hold and are
willing to stake. Validators are selected based on their stake, and their chances of
being chosen increase with the size of their stake. PoS is more energy-efficient than
PoW and is used by blockchains like Ethereum 2.0, Cardano, and Tezos.
3.Delegated Proof of Stake (DPoS): DPoS is a variation of PoS where token holders
elect a limited number of delegates or representatives who are responsible for block
production and transaction validation. These delegates take turns producing blocks
and are selected through voting. EOS and TRON are examples of blockchains that
use DPoS.
4.Practical Byzantine Fault Tolerance (PBFT): PBFT is a consensus mechanism
designed for permissioned blockchains. It relies on a predefined set of nodes, known
as validators, who reach consensus through a multi-round voting process. PBFT
ensures Byzantine fault tolerance, meaning it can tolerate malicious actors within
the network. Hyperledger Fabric utilizes a variation of PBFT.
5.Byzantine Fault Tolerance (BFT): BFT consensus mechanisms are designed to
handle consensus in the presence of faulty or malicious nodes. BFT algorithms
ensure that the network can reach agreement even if a certain percentage of nodes
behave incorrectly. BFT algorithms include Practical Byzantine Fault Tolerance
(PBFT), Tendermint, and Raft.
These are just a few examples of consensus mechanisms, and there are other
variations and hybrid models being developed and used in different blockchain
projects. Each consensus mechanism has its own strengths and trade-offs in terms of
security, scalability, energy efficiency, decentralization, and fault tolerance. The
choice of consensus mechanism depends on the specific requirements and goals of
the blockchain network.
WHAT ARE BLOCKS IN CONSENSUS MECHANISMS ?
In the context of blockchain consensus mechanisms, a block refers to a collection of
transactions that are grouped together and added to the blockchain as a single unit.
Blocks serve as containers for storing and organizing transactions, and they play a
crucial role in maintaining the integrity and chronological order of the blockchain.
Here are some key points about blocks in consensus mechanisms:
1.Structure: A block typically consists of several components, including a block
header and a list of transactions. The block header contains metadata such as a
timestamp, a unique block identifier (hash), a reference to the previous block, and
other relevant information. The list of transactions represents the data that is being
added to the blockchain.
2.Creation: In most consensus mechanisms, including Proof of Work (PoW) and
Proof of Stake (PoS), blocks are created by participants of the network. Miners or
validators, depending on the consensus mechanism, compete or are selected to create
new blocks. They validate transactions, verify their legitimacy, and add them to a
new block.
3.Validation: Before adding transactions to a block, they are typically validated to
ensure they meet certain criteria. This validation process varies depending on the
consensus mechanism and the specific rules of the blockchain network. Validators
may check factors such as transaction signatures, available funds, and adherence to
network rules and protocols.
4.Linking: Blocks in a blockchain are linked together through a reference to the
previous block. This creates a chain-like structure, hence the name "blockchain."
The reference to the previous block ensures that the blocks are ordered
chronologically and forms the basis for the immutability and integrity of the
blockchain.
5.Consensus and Confirmation: Once a block is created and added to the
blockchain, it undergoes a consensus process. Other participants in the network
validate the block and agree on its inclusion in the blockchain. The specific
consensus mechanism determines how this agreement is reached, whether it's
through mining, staking, voting, or other methods. Once a block is confirmed by
consensus, it becomes a permanent part of the blockchain, and its transactions are
considered valid and immutable.
6.Size and Capacity: Blocks have a predefined size limit in most blockchain
networks, and the number of transactions that can fit within a block is limited. The
size limit helps maintain network performance and prevents excessive resource
consumption. When the block reaches its capacity, additional transactions are
queued for inclusion in subsequent blocks.
Blocks serve as fundamental building blocks of a blockchain, providing a structured
and secure way to store and order transactions. By organizing transactions into
blocks and linking them together, blockchain networks create a transparent and
tamper-resistant ledger of transactions.
What then is a Blockchain?
WHAT IS BLOCKCHAIN?
Blockchain is a decentralized and distributed digital ledger technology that records
transactions across multiple computers or nodes in a transparent, secure, and
immutable manner. It provides a way to securely store and verify data without the
need for a central authority or intermediary.
Key characteristics of blockchain include:
1.Decentralization: Blockchain operates on a peer-to-peer network of nodes where
each participant has a copy of the entire blockchain. There is no central authority
controlling the network, making it resilient to single points of failure and censorship.
2.Distributed Ledger: Transactions are grouped into blocks, which are linked
together in a chronological order, forming a chain of blocks, hence the term
"blockchain." This ledger is distributed across the network, and each node holds a
copy, ensuring redundancy and data consistency.
3.Transparency: Blockchain is often transparent, allowing all participants to view
and audit the transactions and data stored on the blockchain. This transparency
fosters trust among participants, as it enables them to verify the integrity and
accuracy of the recorded information.
4.Security and Immutability: Once a transaction is added to a block and included in
the blockchain, it becomes difficult to alter or tamper with. Blocks are linked using
cryptographic hashes, ensuring that any change in a block would invalidate
subsequent blocks, making the blockchain resistant to modification and providing a
high level of security.
5.Consensus Mechanism: Blockchain networks use consensus mechanisms to agree
on the validity and order of transactions. Consensus ensures that all participants
reach a common agreement and prevents double-spending or fraudulent transactions.
Various consensus mechanisms, such as Proof of Work (PoW) and Proof of Stake
(PoS), are used to achieve agreement in different blockchain networks.
6.Smart Contracts (in some blockchains): Smart contracts are self-executing
contracts with predefined rules and conditions encoded into the blockchain. They
automatically execute transactions or actions when specific conditions are met,
removing the need for intermediaries in many scenarios.
Blockchain technology is most commonly associated with cryptocurrencies like
Bitcoin, where it serves as the underlying technology for secure and transparent
transactions. However, its potential extends beyond cryptocurrencies, with
applications in various industries, including supply chain management, healthcare,
finance, voting systems, and more. Blockchain has the potential to enhance
transparency, security, and efficiency in a wide range of processes by providing a
trusted and decentralized infrastructure for data storage and verification
HOW TO MAKE MONEY WITH PROOF OF STAKE
Proof of Stake (PoS) is an alternative consensus mechanism to Proof of Work (PoW)
used in certain blockchain networks. While PoW requires miners to solve
computational puzzles, PoS relies on participants staking or locking up their
cryptocurrency holdings as collateral to validate transactions and secure the network.
If you're interested in making money with PoS, here are some avenues to consider:
1.Staking: In PoS systems, you can stake your cryptocurrency by locking it up in a
wallet or a designated staking platform. By doing so, you actively participate in
block validation and earn staking rewards. These rewards are typically distributed
proportionally to the amount of cryptocurrency you have staked. The more you
stake, the higher your potential earnings. Research and identify PoS-based
cryptocurrencies that offer staking opportunities, and evaluate factors like annual
staking rewards, lock-up periods, and network security.
2.Masternode Ownership: Some PoS networks incorporate masternodes, which are
dedicated nodes that perform additional functions beyond block validation.
Masternodes require a significant amount of cryptocurrency as collateral to operate.
By running a masternode, you can earn additional rewards, such as a portion of
transaction fees or enhanced staking rewards. However, setting up and maintaining
a masternode can be technically complex and may involve higher upfront costs.
3.Delegated Staking: In certain PoS systems, you can delegate your stake to a trusted
validator or a staking service provider. By delegating, you transfer your staking
rights to the validator, who handles the technical aspects of block validation on your
behalf. In return, you receive a portion of the staking rewards generated by the
validator. Delegated staking can be a more accessible option for those who don't
want to run their own nodes or lack the minimum stake required for other
opportunities.
4.Participating in Token Sales or Airdrops: Some PoS projects offer initial coin
offerings (ICOs) or airdrops to distribute their tokens. By participating in these
events, you may acquire tokens at a lower cost or even receive them for free. If the
project succeeds and the tokens gain value, you can potentially sell them at a profit.
5.Providing Services to PoS Networks: As PoS networks continue to develop, there
may be opportunities to provide services that support their ecosystem. These services
could include running infrastructure nodes, offering development or consulting
services, or developing tools and applications that enhance the usability and
functionality of PoS networks. By providing valuable services, you can generate
income indirectly from the growth and adoption of PoS-based cryptocurrencies.
It's crucial to conduct thorough research, understand the risks associated with each
PoS opportunity, and evaluate factors like network security, project credibility, and
potential returns before investing time or capital
HOW TO MAKE MONEY WITH PROOF OF WORK
Making money with Proof of Work (PoW) involves mining cryptocurrencies that
utilize PoW as their consensus mechanism. Here's an overview of the steps involved:
1.Obtain Mining Hardware: To mine cryptocurrencies using PoW, you'll need
specialized mining hardware called ASICs (Application-Specific Integrated
Circuits) or powerful GPUs (Graphics Processing Units). These devices are designed
to perform the complex calculations required by PoW algorithms efficiently.
2.Choose a Mined Cryptocurrency: Select a cryptocurrency that employs PoW and
is mineable with your chosen hardware. Bitcoin is the most well-known PoW
cryptocurrency, but there are numerous alternatives available, such as Ethereum,
Litecoin, and Monero. Research the profitability, mining difficulty, and potential
future prospects of different cryptocurrencies before making a decision.
3.Set Up a Mining Rig: Set up your mining hardware by connecting it to a computer
or mining rig. Install the necessary mining software, which will enable your
hardware to communicate with the cryptocurrency network and contribute to the
mining process.
4.Join a Mining Pool: Consider joining a mining pool, especially if you have limited
mining resources. Mining pools are collective groups of miners who combine their
computing power to increase their chances of solving PoW algorithms and receiving
rewards. When a block is successfully mined, the rewards are distributed among pool
participants based on their contributed hash power.
5.Start Mining: Launch the mining software and connect it to the mining pool. Your
hardware will now start performing the required calculations to find a valid solution
to the PoW algorithm. The more powerful your mining hardware, the higher your
chances of successfully mining a block.
6.Monitor and Optimize: Keep an eye on your mining operation, monitoring factors
like hash rate, power consumption, and temperature. Optimize your mining settings,
such as adjusting the mining software configuration or overclocking your hardware,
to maximize efficiency and profitability.
7.Manage and Sell Mined Cryptocurrency: Once you have successfully mined
cryptocurrency, you can hold it as an investment or sell it on cryptocurrency
exchanges. Timing your sales strategically can be important to capitalize on
favorable market conditions.
It's worth noting that mining profitability can be influenced by factors like electricity
costs, mining difficulty adjustments, and the price volatility of cryptocurrencies. It's
crucial to calculate the potential costs, including hardware, electricity, and
maintenance, and consider the risks and potential returns associated with mining
before investing significant resources.
WHAT IS ASICS
ASIC stands for Application-Specific Integrated Circuit. It refers to specialized
hardware devices specifically designed and built for the purpose of mining
cryptocurrencies that utilize Proof of Work (PoW) consensus algorithms. ASICs are
highly efficient at performing the specific calculations required for PoW mining,
making them more powerful and energy-efficient compared to general-purpose
computing devices like CPUs (Central Processing Units) or GPUs (Graphics
Processing Units).
ASICs are created by manufacturers who design and fabricate the chips to optimize
them for a particular PoW algorithm used by a specific cryptocurrency. They are
tailored to perform the specific hashing operations required by the algorithm, such
as SHA-256 for Bitcoin mining or Ethash for Ethereum mining. The development
and use of ASICs have significantly increased the computational power in PoW
mining, making it more challenging for traditional CPUs or GPUs to compete.
ASICs provide a considerable advantage in terms of mining speed and energy
efficiency, allowing miners to mine blocks and earn rewards more quickly while
minimizing electricity costs.
However, ASICs are often expensive to acquire, and their usefulness is limited to
mining specific cryptocurrencies. Once a new PoW algorithm is introduced or a
cryptocurrency decides to change its mining algorithm, the ASICs designed for the
previous algorithm become obsolete and less valuable.
It's worth noting that not all cryptocurrencies can be efficiently mined using ASICs.
Some cryptocurrencies, like Monero, have implemented ASIC-resistant algorithms
to maintain a more decentralized mining ecosystem, favoring CPUs or GPUs over
specialized mining hardware.
CONCLUSION
In conclusion, both Proof of Stake (PoS) and Proof of Work (PoW) are consensus
mechanisms used in blockchain networks to validate transactions and secure the
network. While they achieve the same goal, they differ significantly in terms of their
approach, resource requirements, and potential advantages.
Proof of Stake is a consensus mechanism that selects validators based on the number
of coins they hold and are willing to “stake” or lock up as collateral. This approach
eliminates the need for miners to compete through complex computations, resulting
in reduced energy consumption and increased scalability. Validators are chosen to
create new blocks and validate transactions based on their stake, and they are
rewarded with transaction fees and newly minted coins. However, PoS has been
criticized for its potential centralization as wealthier participants have more
influence and control over the network.
On the other hand, Proof of Work is a consensus mechanism that relies on miners
solving complex mathematical puzzles to validate transactions and create new
blocks. This process requires substantial computational power and energy
consumption, making it resource-intensive. However, PoW has proven to be highly
secure and resistant to attacks due to the significant computational effort required.
Additionally, PoW networks tend to be more decentralized, as miners can participate
with relatively affordable hardware.
While PoS offers benefits in terms of energy efficiency and scalability, PoW
provides a robust security model and a more decentralized network. It is worth
noting that some blockchain networks are transitioning from PoW to PoS to address
the energy consumption concerns associated with mining. Ethereum, for example,
has plans to shift from PoW to a PoS model in its Ethereum 2.0 upgrade.
Ultimately, the choice between PoS and PoW depends on the specific goals and
requirements of a blockchain network. Each consensus mechanism has its own trade-
offs and considerations, and understanding these differences is crucial when
designing and implementing a blockchain system.
