Lesson 3: Consensus Mechanisms (PoW vs PoS)

How Do Blockchains Agree?

In a decentralized system like blockchain, there is no central authority to confirm transactions. So, how do thousands of computers agree on the current state of the ledger? The answer lies in something called a consensus mechanism.

1. Proof of Work (PoW)

Used by Bitcoin and other early blockchains, Proof of Work requires miners (special computers) to solve complex mathematical puzzles. The first to solve the puzzle gets to add the next block and earns a reward.

Pros: Very secure. Tried and tested.
Cons: Consumes a lot of energy and is relatively slow.

PoW relies on computational power. The more powerful your machine, the better your chances to win the block reward.

2. Proof of Stake (PoS)

Instead of mining, validators are chosen based on the number of coins they lock (stake) into the network. The more coins you stake, the higher your chance to validate a block.

Pros: Energy efficient. Faster and cheaper.
Cons: Early adopters with large holdings have more control.

PoS is used in Ethereum (after The Merge), Cardano, Solana, and many other newer networks.

Other Mechanisms (Optional Reading)

• Delegated Proof of Stake (DPoS): Users vote for delegates who validate blocks on their behalf.
• Proof of Authority (PoA): Validators are known and trusted identities.
• Hybrid Models: Mix elements of PoW and PoS for balance.

Which is Better?

There’s no perfect solution. PoW is ultra-secure but resource-heavy. PoS is efficient but may favor the wealthy. Blockchain projects choose consensus mechanisms based on their goals, values, and scalability needs.

Next up: In Lesson 4, we’ll explore why blockchain matters beyond crypto — in supply chains, voting, identity, and more.