Proof of work vs. proof of stake

The problem both solve

In an open network, anyone can join, including attackers. The consensus mechanismConsensus mechanism The method a blockchain's computers use to agree on which transactions happened, and in what order. makes it expensive to cheat and rewarding to play fair.

Proof of work

MinersMining Using specialised computers to secure a proof-of-work blockchain in exchange for new coins and fees. race to solve a puzzle that takes enormous computation to solve but moments to check. The winner adds the next block and earns the block rewardBlock reward The newly created coins paid to whoever adds a block, on top of transaction fees..

• Security comes from: the cost of hardware and electricity. An attacker would need more hashrateHashrate The total computing power miners are pointing at a proof-of-work network. than the rest of the network.
• Trade-offs: high energy use; mining concentrates where power is cheap.
• Used by: Bitcoin, Litecoin, Dogecoin.

Proof of stake

ValidatorsValidator A participant in a proof-of-stake network who stakes coins and helps propose and confirm blocks. lock up (“stake”) the network’s coins. The protocol picks validators to propose and confirm blocks, and pays rewards for doing it correctly.

• Security comes from: capital at risk. Validators who cheat can have their stake destroyed (slashingSlashing A penalty that destroys part of a validator's stake for breaking the network's rules.).
• Trade-offs: larger holders earn more rewards; the rules are more complex; exits go through queues.
• Used by: Ethereum, Solana, Cardano and most newer networks.

Which is better?

It depends on what you value. Proof of work has the longest track record and a simple security model. Proof of stake uses a tiny fraction of the energy and offers faster finality. Expect both to keep coexisting.