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This question already has an answer here:

I'm newbie to Ethereum and trying to make things clear.
I've read few articles about PoW(proof of work) vs PoS(proof of stake) and what I understood is,

Proof of Work is nothing but the mining, in which miner get some reward to validate the transaction. After validation of transaction, miner will add that block to the public ledger.

Proof of Stake are(special miners) who do not validate the transaction but they validate the block(or create the block).

For instance if I deploy a smart contract to the Ehethereum Blockchain, it cost me 0.01072934 ether, which is fixed fees of deployment and that will goes to the PoS, and there is no role of PoW in this case.

Is this right? If yes, then how can we differentiate it with proof of authority?

This question based on my previous question:Where the Smart Contract deployment charges goes?

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marked as duplicate by Richard Horrocks, Achala Dissanayake, mirg, Meshugah - Bank Of Hodlers, Ismael Jun 21 '18 at 1:54

This question has been asked before and already has an answer. If those answers do not fully address your question, please ask a new question.

  • Can you please provide answer of my previous question @RichardHorrocks – Hina Khuman Jun 20 '18 at 7:38
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Without delving too deep into the specifics of Proof of Work, Proof of Stake, and Proof of Authority, each consensus algorithm uses a different tangible incentive to encourage participants to not act maliciously on the network.

In the case of Proof of Work, the incentive is monetary. It takes computational power to solve the the "hash problem" when creating new blocks, and that computation power costs money.

In the case of Proof of Stake, the incentive is also monetary. It requires that validators stake a portion of their cryptocurrency holdings, which can be taken away from them if they act against the interests of the network.

Finally, in the case of Proof of Authority, the incentive is Identity. Validators have public accounts which presumably were voted in to be an authority on the network. In PoA networks, eligibility to be an authority on the network should be hard to obtain, thus giving value to maintaining the role. In this case, there is an incentive for the validators to act in the interests of the network as they do not want to have their public identities tied to a negative reputation and lose the ability to maintain their role as a validator.

The goal with each consensus algorithm is to provide more incentive to act in the interests of the network, rather than to act maliciously. If they can achieve that, game theory predicts that the network as a whole will work together.

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  • Thanks for the detailed answer, but where the deployment charges goes? it's really confusing for me.. – Hina Khuman Jun 20 '18 at 8:49
  • Your other question has been answered correctly on the other thread. When someone deploys a new contract, it takes up space on the ethereum network, and those changes (which are in the form of a transaction) need to be mined into the block. Fees associated with the storage and mining of that transaction go to the miner who successfully mines the block containing your transaction. – Shawn Tabrizi Jun 20 '18 at 8:53
  • Thanks again for clarification, though what is the role of PoS in this scenario? – Hina Khuman Jun 20 '18 at 8:55
  • Proof of Stake is an alternative consensus algorithm. It potentially can replace Proof of Work as a more economic alternative since it does not require as much computation power and energy resources. – Shawn Tabrizi Jun 20 '18 at 9:10
  • So, you mean currently Ethereum working with PoW, and in future it will be replaced by PoS? – Hina Khuman Jun 20 '18 at 9:22

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