If a blockchain has no central authority keeping the ledger, who decides what the next block is, and how do you stop someone from altering the ledger? These are the questions consensus mechanisms are designed to answer. The two most common are proof of work (PoW), used by Bitcoin, and proof of stake (PoS), which Ethereum now uses.

Related coin: $BTC Current price: 78,110 (24h +0.59%).

▍Proof of Work: Competing with Computing Power

Bitcoin uses proof of work: miners continuously try to calculate SHA-256 hashes. The first to find a result that meets the difficulty requirement earns the right to add the block to the ledger and receive the block reward.

Bitcoin produces a block on average every 10 minutes, and mining difficulty is adjusted every 2,016 blocks: when the network’s total hash rate rises, the difficulty is raised accordingly, bringing block times back to around 10 minutes.

▍Proof of Stake: Security through staked assets

In September 2022, Ethereum switched from Proof of Work to Proof of Stake through “The Merge.” Running a validator requires staking at least 32 ETH. Validators take turns proposing and attesting to blocks according to the rules.

Under Ethereum’s Proof of Stake, each slot lasts 12 seconds, and at most one block can be produced per slot. Validators who act maliciously have some of their stake slashed, while those who remain offline for a long time also have some of their balance deducted.

▍What underpins security?

Proof of Work relies on tangible investments in computing power and electricity: rewriting the historical record would require controlling most of the network’s computing power, which comes at an extremely high cost.

Proof of Stake uses staked assets as collateral: to attack the network, you’d need to control a large amount of stake, and if malicious behavior is detected, that stake can be slashed. Both make “the cost of malicious behavior far greater than the potential gain”—they just put different things at stake.

▍Don’t compare consensus mechanisms alone

When discussing which chain is more secure, the consensus mechanism is only one part of the picture. How widely nodes and validators are distributed, the quality of client software, and how the community responds when something goes wrong are just as important.

▍In summary

Once you understand PoW and PoS, you’ll know what role terms like “computing power,” “staking,” and “slashing” play in the overall system. There’s no shame in taking a steadier approach—surviving matters far more than how much you make on any one occasion.

Have you ever misunderstood this before?