A Blockchain is a digital ledger that contains records of transactions duplicated and is publicly available to anyone that wishes to access it. A Blockchain is secured using cryptography and transactions are verified or validated with a consensus model. This validation is what ensures that all transactions recorded or approved on the blockchain are accurate and correct.
Read more on how a Blockchain works
Consensus model?
A consensus model is a method in which transactions on the Blockchain are verified. Anyone can decide to verify transactions on a Blockchain by using the consensus model of such Blockchain. The two most popular examples of consensus models are Proof of Work (PoW) and Proof of Stake (PoS).
Proof of Work (PoW)
PoW involves the use of computers to perform multiple complex calculations in order to verify any transaction on a Blockchain. For example, the Bitcoin Blockchain employs the PoW consensus model, you would need a mining rig (a large number of supercomputers that are always on, performing complex calculations) to verify transactions on the Blockchain. As each transaction is verified, the validator is rewarded with some Bitcoins, this is known as Bitcoin mining.
PoW requires a lot of energy resources. A mining rig can consume as much energy as a small country. This adversely affects the environment in which it is situated.
Miners in PoW compete to verify transactions, whoever does it first is who gets rewarded. This makes people with more and faster computers at an advantage over others.
PoW is vulnerable to a 51% attack. This is when a miner owns up to or over 51% of the whole mining rig of a particular Blockchain. While this is literally possible if the required resources are available, it is very much unlikely.
Proof of Stake (PoS)
Contrary to PoW, PoS does not require a mining rig or large energy resource. Its method of verifying transactions is quite different. People who want to verify transactions are required to purchase the coin (native cryptocurrency of the Blockchain) and then stake it. Staking means locking your coins in a smart contract. Those who stake in a PoS model are known as validators.
On the Ethereum chain, for example, you are required to stake at least 32ETH to become a validator. Ethereum currently uses PoW but will soon transition into PoS.
A 51% attack is impossible in a PoS system because it is unlikely for one validator to own up to 51% of the coin. Also, if a validator tries to alter transactions, they lose all of their staked cryptos. This makes it discouraging to attack a Blockchain using PoS.
In PoS, there’s lesser competition between miners as validators are randomly selected to verify transactions. This implies more decentralization and lesser control by just one person.
My take: POW or POS
What could be the The possible influence of the Government on each of the consensus model?
In PoS, you only need to have the minimum requirement to become a validator. The more you have, the better your chances of verifying transactions. Critics of PoS argue that the Government can afford and even decide to buy large stakes of the coin and begin to block transactions of their choice.
This is really not the case as having large stakes doesn’t necessarily guarantee being picked to validate a transaction. Validators are selected randomly per transaction. Also, any attempted attack on the Blockchain means risking all your staked assets and as DeFi is quite unregulated, the government does not have power over funds locked by a smart contract, in essence, no one does. The PoW model also has other undisclosed security measures to keep the Blockchain attack-proof.
In PoW, there’s room for competition. The Government can set up a mining rig and take up to 51% of the entire mining rig and then possess the power to attack the Blockchain. The Bitcoin Blockchain is one of the few significant Blockchains running PoW, and there are maxis who are very rich and won’t let this happen. Also, it is a lot of cost for whichever government decides to do this especially as they risk failing at it since it can’t be completely covert.
Conclusion
Both consensus models have their collective downsides and upsides but PoS has relatively more upsides than PoW.
There’s actually little the government can do apart from regulating in their various countries and other interested countries will keep the energy.
