Proof of What?

Proof of Work, Proof of Stake, and Proof of Participation are hot topics around the crypto-industry. These systems are unique in their own ways, and we are here to explain each one.


Proof of Work or PoW was first introduced in the 1990’s as a way to deal with email spam, although the idea blossomed after Satoshi Nakamoto - Bitcoin’s creator - who first applied the technology for use in a digital money system within Bitcoin’s white paper.

Blockchain Ordering -

The first block in a PoW blockchain is hardcoded into its software, and is named the genesis block, or block 0. This block does not in fact reference a previous block as it is the first in the series. The following blocks added to the blockchain always refer to their previous block, and each one contains a copy of the full ledger.

Energy Use -

PoW algorithms determine who can make adjustments to the ledger through mining, or a competitive race to expend computational energy in order to propose valid blocks that meet all of the rules of the network. In order to create a new block on a PoW network, Miners compete against each other to solve complex mathematical equations in the process called hashing.

Rewards - 

The block reward refers to the new cryptocurrency that is awarded by the blockchain to the miner. This a case like Bitcoin, the block reward is reduced after a certain number of blocks have been found.



Proof of Stake or PoS is a modified version of the PoW system. It was introduced in 2012 as a way to solve the perceived dependency on energy consumption as a means to determine blockchain ordering. Rather than relying on computers to generate hash, the idea behind PoS is that participation is determined by ownership of the coin supply.

Using a set of factors determined by the protocol, the PoS system randomly selects nodes, or someone who owns the coin to propose the next block in the blockchain. The goal is the same, to validate the network and creation of new blocks.

Blockchain Ordering -

PoS is quite similar to PoW, in that the first block is hardcoded into the software, and the first block is known as the genesis block. The difference here is that in PoS cryptocurrencies, there is no competition between the miners, and blocks are often said to be Minted rather than Mined.

Energy Use -

Unlike PoW blockchains, PoS blockchains do not determine who can validate blocks based solely on computing power and energy consumption, but are a more energy efficient system where nodes are assigned to create new blocks. Furthermore, PoS blockchains also require the use of specialized software hardware or GPUs, unlike PoW mining equipment, or ASICs.

Rewards -

Much like the PoW system, the block reward for PoS refers to a cryptocurrency awarded by the blockchain, however since block selection is done by owning the coin, exchanges may offer staking services that offer more abilities to stake funds for more regular payouts.


The Proof of Participation or PoP system equally distributes decision power and rewards amongst every node contributing to the blockchain. This is a fairly new system, and removes the link between decision power and resources, leading to fair rewards and better decentralization. PoP is an algorithm that chooses nodes based on the quality of the work they provide while validating transactions. As your quality score increases, you will be allowed to add more and more blocks. Of course, the opposite effect can occur if the quality output drops.