Proof of work vs proof of stake: how blockchains agree on the truth
By SendPay Business · · 2 min read
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A blockchain has no central company deciding which transactions are valid, so it needs a way for thousands of computers to agree. Proof of work and proof of stake are the two best-known ways of doing that, and they are called consensus mechanisms.
Proof of work
In proof of work, computers called miners race to solve a hard maths puzzle. The winner adds the next block of transactions and earns new coins plus fees. Cheating would mean out-computing everyone else, which costs a huge amount of electricity. Bitcoin uses proof of work.
Proof of stake
In proof of stake, validators lock up (stake) their own coins for the chance to add the next block. If they break the rules, they can lose part of their stake. It uses far less energy because there is no puzzle race. Ethereum switched from proof of work to proof of stake in September 2022, an event known as the Merge.
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How they compare
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Energy
proof of work uses much more electricity.
Who secures it
miners with hardware, or validators with staked coins.
Rewards
mining rewards, or staking rewards.
Track record
proof of work has run Bitcoin since 2009; proof of stake is newer at large scale.
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Questions people ask
What could staking earn?
Work out staking rewards after commission.
Crypto staking rewards calculator →Read next
Spotted a mistake or something out of date? and we'll fix it. How our guides are made
This guide is general information, not legal or financial advice. SendPay Business is a technology company, not a bank, and does not take deposits; regulated services on the platforms are provided by licensed partners. Other companies named in this guide are reference points only and are not affiliated with SendPay Business.