Why Is Proof-of-Stake better than Proof-of-Work?
It's pretty clear we are strong believers in staking ETH2.0, but why is that? Proof-of-Stake has a number of benefits over Proof-of-Work; Efficiency, Security and Rewards.
This is part 2 of our Basics of Staking series. Part 1 explains the basics of what is Staking.
Here we will talk about the advantages of Staking compared to the method by which Bitcoin is mined (Proof-of-Work).
Proof-of-Stake has a number of benefits over Proof-of-Work; Efficiency, Security and Rewards.
- Proof-of-Work needs lots of processing power and therefore money to invest in purchasing computational resources and paying for the power use. In terms of processing power and power consumption, Proof-of-Stake requires significantly less.
- With Proof-of-Stake, when a validator takes their staked amount away, they are no longer able to generate new blocks, which means fewer miners will leave. More miners means more distribution, which leads to better overall security.
- In Proof-of-Stake, an attack to the network would need to obtain 51% of the cryptocurrency to carry out a 51% attack. This renders the attack disadvantageous to the attacker.
- The more cryptocurrency someone holds, the more opportunity they have to generate new blocks and thus receive higher rewards from fees.
- The more active in the ecosystem someone is, the more opportunity one has to generate new blocks.
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