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Cardano PoS vs. Bitcoin PoW
We would like to honestly compare Cardano Ouroboros PoS with the Bitcoin PoW consensus algorithm. It will be only a high-level comparison and I will create a summary table at the end. PoS and PoW are both good protocols. However, they are dramatically different in many details and it has a significant influence on usage.
Why consensus is made
First of all, let’s explain why consensus is needed. In distributed networks, there should not be any central authority. Consensus means that the majority of participants agree on the single version of the truth at a given moment. So there are more independent authorities and thus the decision power is distributed.
Within cryptocurrencies, users send transactions and some of them might be fraudulent. There also might be fraudulent authorities that add fraudulent transactions into a block. It would be easy to cheat if there would be a single central authority. It is much harder to cheat in a distributed environment where there are more entities participating in the mutual consensus. If there is a certain number of honest entities then it is hard or impossible to cheat. Both Cardano PoS and Bitcoin PoW require over 50 % honest entities to ensure that the networks add blocks correctly and securely.
So the mutual distributed consensus is made to avoid a single point of failure…
