PoW vs PoS

Proof-of-Work (PoW) is a mechanism Bitcoin uses to regulate the creation of blocks and the state of the blockchain. Proof-of-Work provides an objective way for all members of the Bitcoin network to agree on the state of the blockchain and all Bitcoin transactions. Proof-of-Work forces miners to make trillions of numerical guesses in order to produce a valid block, and thanks to the difficulty adjustment, miners collectively find one block every 10 minutes on average.

Proof-of-Stake (PoS) is an alternative consensus mechanism to Proof-of-Work, developed and used by a few alternative cryptocurrencies. In the Proof-of-Stake model, stakers—the PoS equivalent of miners—lock up funds in a special smart contract. Every time a new block is needed by the network, an algorithm grants a specific staker the opportunity to publish the next block. The algorithm selects the staker via lottery, depending on each staker’s percentage of total staked funds. For example, if a single staker controls 30% of all funds staked on a given network, they have a 30% chance of mining the next block.