Proof-of-Work and Proof-of-Stake are arguably the best-known consensus mechanisms—but new ones are constantly emerging.
The PoW blockchain has long dominated the cryptocurrency landscape, with both Bitcoin and Ethereum using this model. This means that miners are responsible for securing the network and validating transactions—and are rewarded with new coins as a result.
However, a common criticism surrounding proof-of-work is how much energy it uses, and the impact such blockchains have on the environment. Solving arbitrary mathematical equations requires miners to use large amounts of computing power. As the industry matures, there is a need for more advanced hardware with increasing use of electricity.
It has considered proof-of-stake as a more eco-friendly approach. Miners are replaced by validators — nodes that have a financial stake in the smooth operation of the network. While proponents claim that it can use up to 99% less energy than PoW, some fear PoS could lead to higher levels of centralization and censorship. Ethereum is currently in the process of moving to this consensus mechanism during The Merge — and it will be interesting to see how this high-stakes experiment flourishes.
A newer approach is known as published proof of contribution, otherwise abbreviated as PPOC. Here, every participant has a role to play in ensuring the ecosystem is decentralized, democratic and well-governed.