What is the difference between proof of work and proof of stake?
What the interviewer wants to hear
- Both are consensus mechanisms to agree on blocks
- Proof of work: miners spend computation and electricity
- Proof of stake: validators lock tokens and are chosen to propose and attest
- Slashing penalises misbehaviour in proof of stake
- Ethereum moved to proof of stake in 2022, using far less energy
Model answer
Both are ways for a decentralised network to agree on the next block without a central authority. In proof of work, used by Bitcoin, miners compete to solve a hard computational puzzle. The winner adds the block and earns a reward. Security comes from cost: rewriting history would require more computing power than the rest of the network, but it uses a lot of electricity. In proof of stake, which Ethereum switched to at the Merge in 2022, validators lock up cryptocurrency as a stake, 32 ETH per validator on Ethereum. The protocol selects validators to propose blocks and others attest to them. If a validator acts dishonestly, for example by signing two conflicting blocks, part of its stake is slashed. Proof of stake uses over 99% less energy and enables faster finality, though it brings its own questions about stake concentration.
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