What is Proof Of Work Vs. Proof Of Stake | How Does It Work? If you spend enough time in the crypto-community and you’ll witness debates over Proof of Work (PoW) and Proof of Stake (PoS). Fans of PoW will argue that it’s the transaction system Satoshi Nakamoto had in mind for cryptocurrencies. Those in favor of PoS, on the other hand, will argue that mining is outdated, inefficient, and insecure compared to staking.
So you might be wondering, what’s the difference, is one actually better than the other, and why is it better? Well like most things here at Bitcoin Lockup, I am not here to give you my unsolicited opinions, but we are here to give you some objective information that might help you determine for yourself which proof has best proven its worth.
Proof Of Work Vs. Proof Of Stake | How Does It Work?
PROOF OF WORK 
When Satoshi Nakamoto created Bitcoin in 2008, he envisioned a currency that would rely on a trustless and distributed consensus system. This would allow Bitcoin to be decentralized both in technological and financial terms. For instance, when you transact money through a trusted system, a third-party (think banks, credit/debit cards, PayPal) handles these transactions in terms of debit and credit. If Mark sends Sally $100 dollars, the institution will debit Mark’s account $100 dollars and credit Sally with $100. All of the money is handled by and within the third party, so none of the transacted funds belong to either Mark nor Sally until they are withdrawn from the system.
Bitcoin differs from traditional financial hubs by being trustless. This is not to say you can’t trust Bitcoin and blockchain with your money. In fact, it’s quite the opposite. Bitcoin’s trustless nature allows for a peer-to-peer exchange without the need for a third-party mediator.
The traditional mediators are replaced with miners, and these miners work on behalf of Bitcoin holders to see that transaction are successfully processed. In order to see that these transactions are approved, miners commit their computer’s processing power to solve the encrypted algorithms within each transaction. This is what we mean by Proof of Work.
Under a Proof of Work system, miners compete to verify that all the transactions within the candidate block (the block currently being built) are legitimate. To do this, they must solve the encrypted puzzles that verify the integrity of the transacted coins. The first miner to solve these puzzles receives an amount of the transacted currency, also known as a block reward. Once the problem is solved, the transactions create a block that is stored as a public ledger on the blockchain, and the miner announces the solution to the entire network.
As you can see, PoW is dictated by competition and computational output. Imagine an international math competition wherein a previously unsolved proof (the block) is given to the competitors (the miners). Whoever solves this proof first is awarded a prize (block reward), and the solved proof is then posted on the internet for all to see (the block being established in the blockchain).
PROOF OF STAKE
Proof of Stake differs entirely from Proof of Work. Instead of building blocks through work output, the creator of a block is determined by their share, or stake, in a currency.
Under this system, forgers (the PoS equivalent of a miner) are chosen to build blocks based on their stake in a currency and the age of that stake within the blockchain’s network. For instance, let’s say you hold 500,000 Cardano. First of all, allow me to hypothetically congratulate you on your fat stacks. Getting back to the example, under the Proof of Stake system, you’d be more likely to create the candidate block than someone with 100,000 ADA. 
To go even further, if you had been holding your 500,000 ADA in the same address for a year, you’d be more likely to generate the next block than someone who also has 500,000 ADA but who has been holding it in a network address for half a year.
To give you another analogy, imagine if your odds to win the lottery increased based on a) how much money you put into it and b) how long you had been buying tickets. Now, you won’t make millions of dollars by staking your favorite PoS currency, but you can make some nice passive income on top of your investment gains.
It’s important to note that, for a stake to be chosen, it must be held on an address within the coin’s network. So if you were holding Cardano like in the above example, you would need to store it in Cardano’s core wallet. There are also no block rewards in the PoS system. Seeing as there’s no work-centric incentive to outcompete other miners, forgers are only awarded transaction fees.
There’s also a marked difference between Delegated Proof of Stake and regular Proof of Stake, but that’s for another article at another date.
PoW Coins:
PoW/PoS Hybrids:
–Dash
–Pivx
PoS Coins:
–QTUM
KEY DIFFERENCES AND TAKEAWAYS
Proponents of PoW will tell you it allows crypto to more effectively function as a currency. The PoS model, they argue, incentivizes users to stake their coins for extended periods of time, thereby making them inactive.
PoS fans, however, will defend their system’s overall superiority. For starters, it solves the problem of energy consumption that Bitcoin has created. As more transactions and users are added to Bitcoin’s network, more computing power will be needed to accommodate growth. The more computing power that is added to the network, the more the hashrate increases in difficulty. With more difficulty comes an increase in the amount of work a computer must generate to generate blocks, and this increased output leads to greater energy consumption.
Bitcoin’s growth and mining difficulty are exponentially tied to energy consumption, and critics see this as an unsolvable issue under the PoW model. It’s the reason that Bitcoin’s network alone consumes more energy than 159 countries.
Proof of Stake also defends against 51% attacks on the blockchain. As we’ve seen with the recent Bitcoin Cash and Bitcoin civil war, disproportionate mining power can lead to de facto centralization of a blockchain’s network. In order to control a majority of a PoS blockchain, a validator would have to own 51% or more of that crypto’s overall supply. So in order for someone to attack Cardano’s blockchain, for instance, they would have to $609,286,157.643 worth of Cardano to do so. I really don’t see that happening.
Both PoS and PoW have their ups and downs, and I’ll be excited to see how the market responds to coins that utilize either system or a hybrid of both. One last thing to keep in mind for PoW, however, is that once all a currency’s coins are minted and circulated, block rewards will cease to exist. This may incentivize PoW coins to update to a PoS model, but only time will tell.
Still don’t have cold storage for your private keys? click HERE for the Ledger Nano S to hold all of the PoW and PoS coins discussed above!
What do you think? Do you think PoS will overtake PoW in popularity? Sound off below!
Cheers,
The Crypto Renegade
NOTE: This post may contain affiliate links. This adds no cost to you but it helps me focus on giving as much value as possible in every single post by being compensated for recommending products that help people succeed.
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D’CENT vs Ledger Nano X (2020) | Which Bluetooth Hardware Wallet Is Safer?
D’CENT vs Ledger Nano X! In this comparison, we are going to do a head-to-head of two of the most competitive and popular new cryptocurrency hardware wallets in this edition of the hardware wallet roundups.
I am going to dive into which of these bluetooth hardware wallets is better and more secure. How big is your portfolio? Do you need mobile AND desktop support? Do you use any 3rd party wallets for integration? Do you need web-based access instead of a required download?
These are all questions you will need to consider when deciding which of these wallets will be best for you. At the end of the day, the coin support is one of the most important factors (besides security) when deciding which hardware wallet is best for you.
Ultimately, if it doesn’t support the coins you want to store offline, it won’t work for your particular situation. So keep that in mind as we dive into what I consider to be the most important factors when making such an important decision, such as choosing a cryptocurrency hardware wallet.
Ledger Nano X: Overview
The Nano X comes beautifully packaged with the device itself, a USB-C cable, a set of instructions and recovery seed cards. The previous bulky buttons that were on top of the device are now seamlessly integrated on it in a way that’s even a bit hard to notice. All in all a beautiful design. The primary features of this device are the bluetooth connection which allows you to manage this device using your smartphone via the iOS and Android app.
Additionally, you can now hodl, store, or manage up to 100 cryptos simultaneously, all without access to your desktop or laptop computer. This is easily it’s best new features, but aside from the upgraded storage capacity and the wireless connectivity, the device itself is now larger, has an integrated 2-function button, and an overall larger screen for verifying transactions. With a trusted device and a more universal charging cable, this makes it much more compelling to spend the extra money to store more coins and one that you can easily take with you as you travel.
Ledger Nano X: Security
Ledger is at the forefront of developing the industry’s device security. How? And in what ways?
CC EAL5+ SECURE ELEMENT
Only Ledger’s devices can claim the French cybersecurity agency ANSSI’s full certification.
The Nano X and Nano S both feature what is called a ‘secure element’. The chip seen below is the next generation chip that comes in the Nano X:
The secure chip meets the CC EAL5+ certification and run’s Ledger’s proprietary BOLOS operating system.
A Secure Element is a secure chip that…embeds intrinsic countermeasures against many known attacks. This kind of chip is tamper-resistant and protects your device to a range of different attacks.”
Ledger Nano X: Coin Support
The Ledger Nano X utilizes the “Ledger Live” dashboard which is a desktop application that allows you to manage all of your coins, portfolio, and potential trades in an easy to use application. You can use this on both an iOS or Android app as well as a desktop.
This app allows you to manage up to 1,100 coins that are supported by the device. However, only about 200 of them are “native” apps. This means that you can manage them directly within the Ledger Live app, without having to connect to a 3rd party wallet, such as MyEtherWallet or MyCrypto. I will leave a link HERE with a list of fully supported coins.
Ledger Nano X: User Experience
Honestly, the user experience is a massive upgrade from the Ledger Nano S. With that said, It has a few usability issues that I find to be quite difficult to overcome. Although this device is physically larger than its predecessor, it still has a fairly difficult to use early experience.
For example, the screen is still fairly small and still cannot accommodate a QR code for scanning. This may not seem like a big deal, but after using several hardware wallets, it really does make a big difference. Using a QR code is not only safer (because it removes the chance of error from manually typing in a wallet address), but it is incredibly faster and makes the entire of transacting offline, a much easier experience.
Although this device has stepped up the quality considerably from it’s latest iteration, I still feel that utilizing an all new form factor could have been beneficial and a little more innovative than replicating their 1st generation device with a few small tweaks.
D’CENT Wallet: Overview
The D’CENT is a mobile and bluetooth connected wireless hardware wallet device. With additional biometric security and the ease of use, this is a contender for the easiest to use mobile and wireless wallet. So how is it different than Ledger Nano X or other bluetooth devices? The Biometric security is a large differentiator here. It’s super convenient and makes it easy to sign and authenticate transactions on the go.
This means if you want to move your crypto from cold storage to a hot wallet, it can be done quickly and easily. A common scenario here would be if you are trying to pay a friend or you’re shopping and want to pay for a product in store very seamlessly. Let’s take a look at the security, features, and price below to go into a little more detail.
D’CENT: Security
The flagship feature of D’CENT is hands down the biometric security feature of the fingerprint sensor. There are some other hardware wallets that communicate with mobile, and can utilize Face ID or Touch ID for extra authentication with their mobile app, but this gives your authentication on the physical device as well. This is a unique and very secure feature that is not used by any other hardware wallet currently on the market.
The hardware wallet features a built-in fingerprint scanner that manages access to the hardware wallet. This security process improves the convenience for the users and enhances the security during access control. It also provides the wallet with fast transaction signing.
- Multi-IC architecture design
- Bank grade EAL 5+ Secure Element (This is the same security chip used in the Ledger Nano X)
- Secure OS embedded on microprocessor
D’CENT: Coin Support
The coin support is varied. The D’CENT can store and support Bitcoin, Ethereum, ERC20 tokens, RSK, RRC20 (RSK tokens), Ripple (XRP), and MONACOIN. To many, this may not seem like it is very much, however, a majority of the major tokens are ERC-20 tokens and all can be supported natively on this device, which is good. I have not come across a hardware wallet yet that supports RSK and RRC20 tokens yet natively, so that definitely makes this an exclusive hardware wallet first for the D’CENT wallet!
D’CENT: User Experience
One of the main features I like here is the option to generate a valid QR code on the large OLED screen of this device as a way to send funds directly from your smartphone to your D’CENT wallet. This is super convenient and truly makes this a wireless and independent device that can be used on the go via the D’CENT app, which also includes a market price section and of course all of your wallets and current fiat amount stored within each one.
What’s also nice is you no longer need to backup and restore this device for firmware upgrades like you do with other devices (although you can, since this device can also support bluetooth and USB connectivity if you choose). This makes this a very convenient choice when considering the ease of use and security when choosing how to secure your private keys.
D’CENT vs Ledger Nano X: Conclusion
Truth be told, these hardware wallets each have their own unique selling points (as you’ve seen above). It really depends on your situation. For example, if I only wanted to “HODL” the main market cap coins and wasn’t looking to build an expansive portfolio, I would choose the D’CENT wallet.
Why? Because the user experience in form factor is better (in my opinion) for ease of use, and overall security and the fingerprint authenticator gives me peace of mind. The Ledger Nano X is a solid device with a great track record and a trusted development team behind them. However, the screen size is not much bigger than their 1st generation device, and the form factor and user experience is much the same.
Overall, if I had to choose between these devices, it would really depend on which coins and the number of coins I needed to hold securely offline. They are both very high quality and fun devices in their own unique way. Having a bluetooth and wireless hardware wallet is really convenient and provides users a way to start using their hardware wallets in real-world scenarios. However, having that extra biometric security is really a game changer.
What do you think? Would you choose the KeepKey over the Ledger Nano X? Let us know down below in the comments!
Cheers,
The Crypto Renegade
NOTE: This post may contain affiliate links. This adds no cost to you but it helps me focus on giving as much value as possible in every single post by being compensated for recommending products that help people succeed.
