I am a little bit confused about proof of work and proof of stake. I need someone to clarify.
In proof of work, miners get rewarded for solving computational puzzles in the network and adding new blocks to the chain. And people were saying that this is power consuming which I agree on. But it’s also said that miners form a group called pools which is a threat to decentralization if some group takes 51% of the nodes. So here’s my doubt,
- Even if people form a large group of pools for mining, the mining process is automated and everything about verifying a transaction is predefined. In this case, how come the power or control can go into the hands of people? The only thing we are required to do is to set up a mining node and everything is automated, right?
In proof of stake, people can become validators by pitching a certain amount of the native currency and can mine based on their stake. In the case of ETH 2.0, 32 ether is required to become a validator. And we say that this method reduces the flaws from proof of work. And my question here is,
- In proof of work, even though most miners don’t have the top hashing power, they are still nodes and can take part in verifying a transaction. While in proof of stake, not everyone will have that 32 ether though the stake amount is reduced further. So the miners will get reduced than the ones we had in proof of work. Will this not give that centralized power to the validators? Since the miners might get cut into half due to the pitching of ether, how come this be a more decentralized consensus method than proof of work?
This would be a noob question for some people but please do bear with me. I know I am missing something and that’s why am here to fix it. Thanks