International Journal for Research in Applied Science & Engineering Technology (IJRASET) ISSN: 2321-9653; IC Value: 45.98; SJ Impact Factor: 6.887 Volume 6 Issue XII, Dec 2018- Available at www.ijraset.com 786 © IJRASET: All Rights are Reserved Proof-of-Work Vs Proof-of-Stake: A Comparative Analysis and an Approach to Blockchain Consensus Mechanism Husneara Sheikh 1 , Rahima Meer Azmathullah 2 , Faiza Rizwan 3 Department of Computer Science, 1 Prince Sattam Bin Abdalaziz University Abstract: Blockchain is a pioneering technology which has brought huge popularity for new virtual currencies where in transactions are recorded after being verified. The transactions are then verified by many clients or "validators," to solve the reliability issue among several nodes implemented in digital currency's peer-to-peer network. Though there are different alternate consensus algorithms available, the most commonly implemented algorithm are Proof of Work (PoW) algorithm and the Proof of Stake (PoS) algorithm. In this paper, we present a comparative study of distinctive consensus algorithms that are currently applied in modern blockchain. This analysis focus on the consensus mechanism, reward of the validator who invests time to mine or verifies the block, and the available security risks available within the algorithm. Also, we will discuss the difference in basic characteristics and cryptocurrencies used in an algorithm. Finally, we will conclude future trends for consensus algorithms used in blockchain. Keywords: blockchain; PoW; consensus algorithms; cryptocurrency; DDoS I. INTRODUCTION TO BLOCKCHAIN The blockchain is a resourceful invention by Satoshi Nakamoto where the information keeping in the shared database which are easily verifiable and not specified to any single location. It is a decentralized technology and there is no way for the hacker to corrupt the information in any transaction connected to the process of identity verification. Blockchain eliminates risks of data located centrally and has no single point of failure by various identical block across the network. Blockchain has been operable without failure since the invention of a cryptocurrency, Bitcoin, in 2008 on the basis of public and private “keys”. Satoshi Nakamoto has introduced proof of work (PoW) to build a distributed trustless consensus and resolve the double-spend problem. Blockchain technology is disrupting almost every industry for its improvement in efficiency and security. There are two primary algorithms, PoW (Proof-of-work) and PoS (Proof-of-stake) through which Blockchain operates and are required to decide whether to invest in a cryptocurrency using some decisive factors. Some significant features to understand in Blockchain include speed, applications as well as the consensus algorithms. In this paper, we will compare to know about; PoW (Proof-of-work), POS (Proof-of-stake). II. UNDERSTANDING PoW AND PoS CONSENSUS ALGORITHM PoW: Proof-of-Work or PoW, is the original consensus algorithm in a Blockchain networks, where user sends a digital token to each other, verifies the transactions and create new blocks to the chain. In this algorithm, all miners or validators participate to validate and confirm the transactions carefully on the network to get rewarded. All the verified transactions in the network is collected into blocks by the distributed ledger and arranged accordingly. This process is called mining. Proof of work is a protocol that prevents cyber threat as in distributed denial-of-service attack (DDoS) which intends to drain computer resources by sending numerous false requests. A. How does PoW work? The miner or validator has to perform complex mathematical calculation to find digital coins. The successfully verified transactions are then stored in the new block and thus create a new group of blocks in blockchain, a public distributed ledger. There are two important aspects of mining; one is to check the validity of a transaction, and another is to create new cryptocurrency mined by the rewarded validators for their previous work. The miner will be rewarded with new cryptocurrency if they resolve the task first and this way, it interests new more miners. Furthermore, the mining process enhances the network computing power and computation to make a coin to escalate, which makes the mining process for the coin more difficult and expensive for the single miner.