POW and POS are the two most well-known mechanisms that help achieve consensus in digital currency. In other words, algorithms prove the fact of perfect work. They appeared at different times and are widely distinguished by the principle of functioning, but the purpose of their creation is the same.
What is POW?
The concept of POW was first created in 1993, which back then, the developers Cynthia Dwork and Moni Naor did not use a lot of terminology, rather they only advanced a completely understandable and well-considered hypothesis. According to the opinion of the creators, a user who wants to access a particular resource, needs to perform calculations of some function that is complex, but feasible to solve. Thus, the common resource will be protected from all sorts of abuse.
Later in 1997, Adam Hack launched the Hashcash project, which also dealt with protection from spam. For these purposes, the program needed to perform resource-intensive processes, and the results of the work done can be verified by a simple calculation.
The term POW officially appeared in 1999 and still has not lost the original meaning in today’s time. Experts do not doubt the benefits of the algorithm, but they condemn the creators for the fact that it spends a huge amount of resources, which must be reduced. Of course, their attacks can be explained, since POW exceeds the most powerful computer in the world by power consumption. It can be said that, in part, of the basis of these beliefs, a POS algorithm was created.
What is POS?
Launched in 2012 as part of the PPCoin (PeerCoin) cryptocurrency, the POS algorithm was formed on the same ideology as the POW. POS nodes try to hash the amount of known data in search of a result less than a certain value. The program system implies a proportional distribution of values corresponding to the number of coins in the user’s account.
The above scheme is quite attractive, since the energy is distributed evenly and “wasted capacity” is not observed.
At the same time, disputes on POW and POS between users do not cease to this day, although the essence of these disagreements is more theoretical. Of course, practice proves that the role of a developer in creating a security system is very high.
Many cryptocurrencies have enjoyed an alternative option, which implies the use of POW at the stage of classic currency issuance through mining, and after the completion of the emission, the digital currency goes to the POS stage.