PoW vs PoS (part 1)

This article analyzes in depth the Proof-of-Work and Proof-of-Stake mechanisms used in blockchains. Most of the information provided in this article is well-established and accepted in the blockchain literature, with occasional personal observations, research and interpretations. All PoW and PoS system structures will be taken as a foundation and analyzed in detail. This guide is one of the most comprehensive examples of understanding PoW and PoS systems in Turkish or foreign sources.
1. What is blockchain and what are blocks? DLT (Distributed Ledger Technology, Distributed Ledger Technology) is a technology that allows various data (transfers, account statements, etc.) to be written and recorded by decentralized people and made accessible, updatable and verifiable by everyone. In short, the technology we call DLT is based on the principle of distributing all the records on the system to many people and ensuring that everyone keeps these records and ensures the security of the data. Blockchains are a member of this DLT technology family. Blockchains are actually a computer program, everyone downloads this computer program to their computer and confirms the security, unchangeability and accuracy of the data in it with other people in the system.
Not all blockchains are decentralized, in fact many projects in crypto today are far from decentralized. The statement "Blockchains are decentralized" is absolutely false. More precisely, "Blockchains can be centralized" because in order to call a blockchain decentralized, it must be easy to participate in it (i.e. the blockchain data I described above must be easy for anyone to download).

In other words, the decentralization of blockchains is measured by the ease with which people can download the data on the blockchain and verify its security and authenticity. If you cannot easily perform these operations on a blockchain (we call this situation "node" installation), that blockchain is centralized. Not only that, because blockchains are constantly growing (I will elaborate in the article), if the growth rate of blockchains increases (for example, growing blocks), downloading this data may be easy at first, but in the future it becomes difficult and centralized. I understand blockchains, they are just a distributed ledger technology and a database that anyone can download to their computer and decentralize. But where does this "block" and "chain" come from?


The words block and chain are related to how blockchains process data. Blockchains store the data I described above in tiny data packets called "blocks". In other words, every transfer, every NFT, every small transaction on the blockchain contains data, and this data is stored in packets of information called blocks. For example, in Bitcoin, these data packets are added to the blockchain in 10 minutes. This is where the "chain" comes from. These data packets, called "blocks", are added one after the other, "like a string", so to speak.
Maybe a question like why do we need blocks or why each block comes out with a certain amount of time (I love this question. :)) The answer is actually very good. The transactions I do on the blockchain in Turkey in the world need to be downloaded to the computer of the man who set up a node in Papua New Guinea. Therefore, we expect these tiny packets of information to be distributed to other computers (nodes) around the world. For example, a 1 MB block of Bitcoin goes to the computer of every person in the world who has set up a Bitcoin node and this information is downloaded. If we made the block time 1 second instead of 10 minutes, and if we made it 100 MB instead of 1 MB, these computers would not be able to download such large information in a very short time. You see, this is why blockchains don't scale, we can only send tiny packets of information of a certain size at a certain time. 🙂 If the blocks are fast or large, these nodes will not be able to catch up with the blockchain, only computers with very fast computers and internet will be able to download this data, so as I said above, it will be difficult to build nodes and only certain people will be able to build nodes and decentralization will be broken.

Anyway, let's move on... The first thing we can deduce about the addition of blocks is that BLOCK CHAINS ARE INFINITE. BECAUSE BLOCKS WILL BE ADDED AS OPERATIONS ARE PERFORMED. Remember, blocks are tiny little packets that store data. As transactions are made on the blockchain, these packets will continue to be added. Bitcoin, Ethereum, etc. Every cryptocurrency that uses blockchain technology will issue blocks forever as transactions are made and these blocks will continue to be added to the blockchain. You may ask why Bitcoin is limited at 21 Million, it is the reward per block that is limited. (We will get to this part.) I repeat, blocks are infinite. In summary, blockchains are systems of distributed databases, the principle of which is that anyone can download, verify and store data in the database. Blocks are tiny packets of data that will continue to be added infinitely as transactions are made in blockchains. We call it a chain because each block adds to the previous one and so on. That's it. Now comes the question that will change the whole course of this article and focus on the main topic: WHO ADDS THESE BLOCKS? So let's start with a sensational sentence: THERE IS NO NEED FOR MINING OR STAKING TO ADD BLOCKS. Anyone can add blocks to blockchains. To understand this system, we first need to know the anatomy and physiology of blocks in a blockchain. The anatomy of a block in Ethereum is as follows, but I have simplified it to make it easier to understand.