Mining Difference: PoW, PoS, DPoS

Tokencan Exchange
3 min readJan 18, 2023

Those who invest in virtual assets (cryptocurrency) must have heard of mining.

Mining? It is natural that those who are new to investing in virtual assets may have heard of it for the first time, or only heard of the name, but do not know the details. Today’s post is going to briefly post about mining so that novice investors in virtual assets can enter into more detailed knowledge.

1. PoW(Proof-Of-Work)

The first mining method to be explained is PoW (Proof-Of-Work). It is also called proof-of-work, and it is a method of proving using hash calculation processing hardware. Simply put, it is a method of mining coins using hardware equipment.

PoW (Proof of Work), an abbreviation of Proof of Work, literally means that cryptocurrency is created through a certain work. To explain one representative example, Bitcoin is made with a PoW (Proof of Work) algorithm, and Bitcoin is mined through the work of solving difficult formulas. No one will calculate it directly, and at this time, the mining will proceed through the equipment (mining machine) mentioned above.

The biggest disadvantage of proof-of-work is that it requires a large amount of power to run the mining machine. But with its disadvantages, there are also advantages. It has an advantage in security, but blockchain requires a 51% stake in the entire network in order for someone to manipulate transaction details or attempt hacking. In a situation where power consumption is high, the cost consumed for hacking is also high, so it is practically impossible to hack or manipulate transaction details. So, in terms of security, it is very safe.

2. PoS(Proof-Of-Stake)

Proof of Stake (PoS) allows cryptocurrency holders the opportunity to directly verify transactions and receive transaction fees by staking coins. And PoS was introduced to overcome the system disadvantages of PoW. Proof-of-stake protocols select validators through a random selection process, but those with more coins automatically get more mining power.

The reward for participating in Proof of Stake (PoS) is paid in the form of interest, and you can receive rewards when you connect a wallet containing a certain number of coins to the blockchain network.

The advantage of proof-of-stake (PoS) is that it does not require a lot of hash power, so it does not consume much power and is economical. It is also stable due to the decentralization of block producers.

However, the downside is that since all investors are tied up in staking to receive interest, the trading volume of coins may decrease, and a structure in which a person with a lot of coins may gain power is a disadvantage.

3. DPoS (Delegated Proof-Of-Stake)

Finally, DPoS is also known as Delegated Proof of Stake. DPoS is a consensus algorithm in which cryptocurrency owners select a representative node through voting in proportion to their stake, and these representative nodes make decisions based on consensus.

In the case of PoS (Proof of Stake), there is a disadvantage that it takes time because all nodes are given the right to create blocks, but in case of DPoS, the consensus time and cost can be reduced because there are a small number of top nodes.

Representatively, three mining methods were briefly explained, but it is true that many people prefer the PoS method these days. Since security and other disadvantages are being improved and developed more than before, there is a high possibility that most of the existing coins or new coins that will appear in the market will introduce proof of stake. Recently, Ethereum is also preparing for a change from PoW method to PoS, and I think that these changes are predicted in advance.

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