Proof of work vs proof of stake

What are proof of work and proof of stake?

Proof of work (PoW) and proof of stake (PoS) are ways for a blockchain network to agree on which blocks belong in its shared history. Proof of work uses repeated computation to propose blocks. Proof of stake uses crypto-assets committed by validators to support their participation. Bitcoin uses proof of work; Ethereum uses proof of stake. Both sit within a network's consensus mechanism.

The problem is that computers can receive different transactions or competing blocks. Without an agreed history, the same funds might appear to have been spent in more than one place. A consensus mechanism gives participants rules for choosing a history, while nodes also check whether each transaction and block is valid. How a blockchain works follows a payment through those steps.

The difference matters when reading about mining, validators or staking. Those words describe work performed for the network, with different resources and consequences for the participants.

Proof of work: a costly search, followed by checks

In Bitcoin, a miner assembles a proposed block and repeatedly calculates hashes, changing an input until the result meets the network's difficulty target. A hash is a cryptographic output calculated from data. Finding a qualifying result requires repeated attempts; other nodes can check the result and the block's transactions without repeating the entire search.

The difficulty target limits which results qualify. Nodes reject a block that breaks the transaction rules even if its miner performed the work. When valid histories compete, Bitcoin follows the chain with the greatest cumulative proof of work.

An attempt to replace accepted history must therefore compete with the work being added by other miners. This requires computing equipment and ongoing electricity use. The expenditure is part of the mechanism that makes interference costly; it does not make every transaction or service using Bitcoin trustworthy.

Proof of stake: validators put assets at stake

On Ethereum, validators deposit ETH and run software that checks blocks. The protocol selects a validator to propose a block, while other validators send attestations: votes about the block and the history they accept. Their staked ETH gives those votes weight within the consensus rules.

Certain violations, such as signing conflicting messages, can cause part of a validator's stake to be destroyed. This penalty is called slashing. Ordinary downtime can also bring penalties, but it is not the same offence as a slashable conflicting vote. The distinction matters because the consequences depend on what the validator actually did.

Proof-of-stake networks do not all use Ethereum's arrangement. Cardano, for example, is a proof-of-stake network where an ADA holder can delegate stake to a pool. The ADA remains spendable by the holder under Cardano's delegation rules. Staking therefore does not universally mean locking assets in the same way.

Which resources does each method require?

Proof of work requires miners to keep performing computation. Proof of stake replaces that competitive search with validator selection and assets at stake, while validators still need computers, electricity and network connections. The electricity-intensive search is the principal resource difference described by the proof-of-work mechanism.

How the two consensus approaches differ

Question	Proof of work	Proof of stake
Who proposes blocks?	Miners that find a qualifying computation result	Validators selected under the protocol's rules
What supports participation?	Computing equipment and ongoing electricity use	Crypto-assets staked or delegated under the network's rules
What makes interference costly?	Competing with other miners' cumulative work	Obtaining stake and, where the rules provide for it, risking penalties
Network example	Bitcoin	Ethereum

Neither label is a complete assessment of a network. Mining power can concentrate among operators; stake and validation services can also concentrate. Software failures and the behaviour of participants matter under either approach. An energy comparison alone does not resolve those questions.

Ethereum's switch to proof of stake

Ethereum used proof of work before switching to proof of stake on 15 September 2022. Bitcoin continues to use mining. A description of Ethereum's former mining process therefore does not describe how its blocks are confirmed today.

In this comparison, stake is the resource supporting network participation. The staking guide explains the broader term and the distinction between participating with crypto-assets and holding a staked security. Product arrangements are a separate question from how a network reaches consensus.

Virtune Bitcoin Prime ETP gives Bitcoin price exposure through a security. Holding the crypto ETP does not make its owner a miner or validator. The ETP guide explains what the holder owns.