What is Proof of Work, Proof of Stake, and Solana's Proof of History, and Why Does It Matter?

Ivy Oracle

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Published on July 8, 2025

Proof of Work, Proof of Stake, and Solana's Consensus Design

Proof of Work (PoW) and Proof of Stake (PoS) are two of the main ways blockchains confirm transactions without a central authority. They help networks stay accurate and secure. In Proof of Work, miners do the job. In Proof of Stake, validators take the lead. Both help keep the blockchain ledger in sync.

Solana introduces something else: Proof of History (PoH). This is not a consensus mechanism by itself. It records when events happen and works alongside Solana's Proof of Stake system. Combined with Solana's Sealevel engine, which can process many smart contracts at the same time, PoH helps speed up transactions and improve staking efficiency.

Proof of Work vs Proof of Stake vs Proof of History

Consensus is essential in blockchain networks. Proof of Work and Proof of Stake allow blockchains to reach agreement across all nodes, without relying on one central system.
Proof of Work uses a lot of energy. It requires miners to run machines that solve complex problems. Bitcoin's carbon output is on par with Qatar, and it uses as much electricity as Poland.
Proof of Stake uses staked tokens for security. Validators lock their tokens as collateral. If they act dishonestly or disconnect, they risk losing part of their stake. Ethereum moved to Proof of Stake and cut energy use by over 99 percent. Token holders can also earn staking rewards.
Solana's Proof of History is about timing. It creates a verified timeline of events. That lets validators process blockchain transactions faster, without needing to agree on timestamps first.
Solana outperforms in transaction speed. It handles 1,300 to 1,400 transactions per second in live conditions. Ethereum averages 12. Bitcoin averages between 3 and 7.

Why Blockchain Consensus Matters

Consensus is how blockchain networks make sure everyone is working from the same version of the ledger. It prevents duplicate transactions and ensures that data stays accurate.

Every node in the blockchain holds a full record. Each new transaction must be verified and added in the same order across the network. If nodes do not agree, the system breaks.

Double spending is blocked through this process. Once a transaction is verified, it cannot be repeated or reversed.

Banks use centralized systems and manual checks to do this. Blockchains use code, rules, and validator nodes.

A node is a connected computer that plays a role in the network. Some store data. Others propose and validate new blocks. Blockchain validators confirm whether transactions meet the required rules and ensure blocks are added in the correct order.

Consensus is the protocol that keeps everything aligned across the network.

Image courtesy of CodeFinity

Let's take a step back for a moment and consider the basics of blockchain technology:

What Is a Node and How Does the Blockchain Work?

A node is just a computer that joins the blockchain network. It keeps a full copy of the blockchain ledger and helps move transactions along. Some nodes do more than others. The ones responsible for keeping things in order are called validators, or miners if we're talking about Proof of Work. Their job is to check, propose, and approve new blocks.

The blockchain itself is a kind of digital ledger. Think of it like a database that records every transaction and event. Once something's added, it cannot be changed. Everything is visible and locked in place. The name comes from how it works: blocks of data are linked together, one after another. Each block can hold hundreds of transactions, and the network is kept secure by a large number of validators or miners who all pitch in.

So how do these people or machines agree on which transactions are legit? That's where consensus comes in. Think of it like a rulebook that tells everyone how to line up and verify each block. Every node in the network has to agree on what goes into the next block. If they don't, you end up with issues like double spending or outright fraud.

What Is Double Spending?

It's just what it sounds like. If someone sends you $100, you want to be sure they haven't sent the same $100 to someone else. Consensus systems like Proof of Work, Proof of Stake, and others are set up to make sure this kind of thing does not happen.

Traditional banks handle this with layers of checks, central databases, and teams of people. With cryptocurrency, the goal is to do it better, faster, and without needing anyone to step in. That's why consensus methods are so important.

PoS vs PoW Blockchains: Where Does Solana's PoH Fit In?

Keep reading to get into the details of Proof of Stake (PoS), Proof of Work (PoW), and Solana's Proof of History (PoH). We'll look at how each one works, what they offer, and where they fall short.

Bitcoin was the first Proof of Work blockchain. Ethereum, Tron, Cardano, and Avalanche use Proof of Stake. These are among the best-known blockchains out there today.

Solana runs on a mix of Proof of Stake and something called Proof of History. That setup helps it handle staking and process transactions quickly. We'll break down how Proof of History works in a bit, and why it's a key part of what makes Solana different.

How Proof of Work and Proof of Stake Function

Proof of Work uses computing power to reach consensus. Miners race to solve hard math problems. Once one of them cracks it, a new block gets added to the chain. This system verifies transactions and locks them in place.

It takes a lot of energy to keep this going. That's not a flaw. That's the point. The power needed is the proof that real work was done.

When comparing systems, PoW stands out for using a huge amount of energy. That's a concern. It's also slower, which limits how many transactions it can handle. But even Proof of Stake has its own challenges with speed and scaling.

Proof of Stake skips the heavy computing and instead picks validators based on how many tokens they lock up. That locked-up amount is used as a kind of insurance. If validators act badly, they lose it. This system makes consensus faster and uses way less energy than PoW.

Proof of Work

Unlike Proof of Work, where the race is all about who has the most powerful mining setup, Proof of Stake relies on how much capital a validator has staked. The more tokens someone locks up, the higher the chances they get picked to propose and validate the next block.

Once a validator is chosen, other validators check the work. If everything checks out, the block is added to the chain. The validator who proposed it earns a reward. That could be newly created tokens or a cut of the transaction fees.

If someone tries to cheat or goes offline for too long, there's a penalty. It's called slashing. A portion of their staked tokens gets taken away. That risk is what keeps validators honest and active.

What Is Proof of History?

Proof of History is often confused as a consensus system, but it is not. Even though plenty of websites claim otherwise, it does not work the same way as Proof of Stake or Proof of Work. Solana uses both Proof of Stake and Proof of History together.

So what does Proof of History actually do? It helps speed things up. It creates a way to order events on the blockchain without needing every node to check in with an outside clock or each other. This process, combined with Solana's parallel processing system called Sealevel, allows it to scale better than most other blockchains.

Image courtesy of Inara

Proof of History relies on something called a Verifiable Delay Function. In Solana's case, it uses a SHA-256 hashing sequence. This creates a long, unbroken chain of hashes. Each transaction gets tied to that chain and receives its own time "stamp."

This setup acts like a cryptographic clock. It proves that time has passed between events and adds a verifiable timestamp to each one. That means it can show not just the order of what happened, but that each step took place at a specific point in time.

Because the order is already sorted out, validators can jump straight into verifying transactions. It saves time and makes the whole process run more smoothly.

Validators processing transactions and verifying each other's validations

Image courtesy of base256

Are There Any Downsides to Solana's Proof of History?

Proof of History does come with a few trade-offs. One of the main issues is that it adds more engineering complexity. That complexity has been part of the reason why Solana faced stability problems in the past. If you were paying attention in 2021 or 2022, you probably remember the repeated network outages.

It also makes it a bit harder to become a validator. The entry requirements are higher compared to other blockchains.

That said, most of the earlier technical problems have been worked out. Solana has become much more stable and still holds its position as the fastest and most scalable blockchain around.

For people who are just staking their tokens through a reliable validator, these issues do not really affect them.

Like all blockchains, Solana can still run into congestion during peak periods. Whether a solid Layer 2 solution built on the Solana Virtual Machine can ease that pressure is something worth watching.

How Fast Is Solana, Really?

You'll often see claims that Solana can handle up to 65,000 transactions per second. That number gets tossed around a lot. But like many performance stats in blockchain, it's theoretical-not what you'll see in practice.

Maybe 65,000 TPS is possible under perfect conditions, running the simplest kind of transaction on a testnet with no one else around. Sure, it might have happened once. But in the real world, Solana usually runs closer to 1,300 transactions per second.

This kind of gap between potential and actual performance is not just a crypto issue. Traditional finance has the same problem. Visa is said to support 24,000 transactions per second. But according to Bitcoin.com, the real average is more like 1,700.

If you want to know how Solana is performing right now, you can check for yourself. The blockchain explorer at Solscan.io shows the live average TPS.

Blockchain Explorer on Solscan.io

The green bars you see on Solscan show how fast validator voting happens. The purple bars are what matter more. Thats the real transaction speed, which usually sits between 1,300 and 1,400 transactions per second.

Sure, that is a lot lower than the advertised 65,000. But it is still far ahead of Ethereum, which averages around 12 to 15, and much faster than Bitcoin's 3 to 7.

Chainspect has a simple dashboard that tracks live TPS across different blockchains. Solana is usually at the top. Behind it are lesser-known names like ICP and Taraxa. Then come bigger chains like BNB Chain, Stellar, and Tron.

Image courtesy of Chainspect.app

Interestingly, Ethereum is currently (just about) outperforming one of its Layer 2 scaling solutions, Optimism.

Either way, one thing is clear, Solana's hybrid PoS and PoH architecture makes it the fastest blockchain operating today.

Pros and Cons of Proof of Work and Proof of Stake

Below is a breakdown of the commonly accepted strengths and weaknesses of each system. Some of these points are often repeated without much context, so we'll clear up a few of the assumptions-especially when it comes to how secure each method really is.

Energy and Environment

PoW: Uses a lot of energy. The amount of computing power required brings real environmental concerns.
PoS: Far more energy-efficient. It runs on much less electricity than Proof of Work.

Scalability and Speed

PoW: Has trouble scaling. It is slower and tends to cost more due to longer block times and network congestion.
PoS: Handles more transactions per second and moves faster overall.

Accessibility and Cost

PoW: Expensive to take part. You need dedicated mining equipment and will rack up electricity bills.
PoS: Easier to join in. You do not need advanced hardware, and energy use is low. Still, becoming a validator means locking up a large amount of capital.

Economic Incentive

PoW: No passive rewards for simply holding tokens. Only miners earn from the network.
PoS: Offers the chance to earn by staking. Token holders can collect rewards without active participation.

Attack Vulnerability

PoW: At risk of a 51 percent attack. If one party controls most of the computing power, they could manipulate the system. Large networks are harder to attack, but smaller ones can be more exposed.
PoS: A similar 51 percent risk exists, but the cost of attacking is higher. Anyone who tries risks losing their entire stake, which makes most attacks not worth the effort.

Security

PoW: Has a long history of stable performance. It has held up well over time across major blockchains.
PoS: Still relatively new. The security approach is evolving, and long-term results are still being watched.

Decentralization

PoW: Encourages wider distribution of control. Open mining competition helps spread power across more participants.
PoS: Large holders can gain more control. But if they misuse that power, they risk losing their tokens, which keeps bad behavior in check.

How Much More Energy Efficient Is Proof of Stake Compared to Proof of Work?

We already covered that Proof of Work uses much more energy than Proof of Stake. But here's something that might surprise you: Ethereum did not start out as a Proof of Stake blockchain.

Until 2022, it ran on Proof of Work. That changed with a major upgrade called "the Merge." After the switch, Ethereum's energy use dropped by 99.84%. You can see the difference clearly in the data.

Graph courtesy of Digiconomist

Bitcoin still draws criticism for how much energy it consumes. And the numbers back it up.

Bitcoin's carbon footprint is currently about the same as Qatar's. Its energy use matches what the entire country of Poland consumes.

Bitcoin uses a lot of resources!

Source: Digiconomist

Compare this to Ethereum’s yearly stats, and we see a very low energy usage and carbon footprint.

The Ethereum footprint is still comparable to those of countries (Gibraltar and Faroe Islands), but they are small and sparsely populated!

Here’s how Solana stacks up from a single transaction perspective:

From a 2024 report by the Solana Foundation

Beyond energy and sustainability, the other big advantage of Proof of Stake is the ability to earn passive income. By staking tokens, users can receive rewards over time, similar to earning interest from a bank.

This is something Proof of Work blockchains do not offer. Only miners benefit from network rewards in that system, while token holders earn nothing just by holding.

Staking on Ethereum Compared to Solana

Ethereum is the biggest network for decentralized finance, and ETH is the second-largest cryptocurrency by market cap. That means Ethereum's main staking platform, Lido, holds a much larger total value than Solana's liquid staking protocol, Jito.

But Ethereum also has high gas fees. This makes Solana a more affordable choice for staking, especially if you are working with smaller amounts or looking to restake without racking up extra costs.

Solana and Jito also come with another advantage. They offer both standard staking rewards and MEV (Maximal Extractable Value) rewards, which can push annual returns even higher.

Still, it is not about one being better than the other. It often comes down to which asset you believe in more. Plenty of crypto users choose to stake on both networks.

Is That the Whole Story?

We mentioned earlier that the pros and cons of blockchain systems are not always as simple as they first look. Here's a closer look at what those headline stats and claims leave out.

PoW Energy Use and Its Real Impact

Yes, Bitcoin uses a lot of energy. That part is not in question. But recent research, including a 2025 report by the Cambridge Centre for Alternative Finance, shows that over half of Bitcoin's energy now comes from renewable sources like wind and hydropower.

That still leaves the other half coming from traditional sources. Which means Bitcoin continues to place pressure on global energy systems.

PoS and PoW: Which Is Safer?

Proof of Work is often seen as the benchmark for blockchain security. The thinking goes that the more money spent on mining, the more secure the chain. But that view has been challenged by researchers and experts in the space.

In a conversation hosted by Ava Labs, Dr. Fahad Saleh, Associate Professor of Finance at the University of Florida, offered a different take.

He pointed out that it is not just about how much energy or money is spent on mining. What matters more is the cost of taking over the network. In his view, Proof of Stake can offer stronger protection because the capital securing the network is locked in and can be slashed if validators misbehave.

He also noted that several Proof of Work chains, including Ethereum Classic, have already suffered 51% attacks. So high mining costs do not guarantee safety.

Proof of Work systems also burn through capital. Mining rigs become obsolete quickly, and once that happens, the money is gone. It does not contribute to the long-term strength of the network.

Proof of Stake works differently. The money stays in the ecosystem. Validators are required to lock up their capital, and if they act in bad faith or go offline, that stake can be reduced. The risk of losing that money is what keeps them honest. They have skin in the game.

Does Solana Use Slashing?

Solana does not currently have slashing. The network's fast design means validators can sometimes appear to be acting badly when they are not. As a result, applying slashing in the usual way could end up punishing honest actors. On top of that, Solana’s cryptographic clock makes it difficult to log malicious actions clearly.

So how does Solana deal with bad validators?

It relies on fork choice rules and gossip protocols to keep the system in check. These methods help identify and contain issues without slashing, but they do not log bad behavior in a way that can be traced or proven later.

That may soon change. A new proposal called SIMD-0204: Slashable Event Verification is in the works. It aims to create a system for reporting validator violations. This would not apply penalties yet, but it would build a clear record of what happened.

The idea is that with this data in place, developers could build dashboards and tools that show how each validator behaves. That would help stakers choose who to delegate to and push validators to act responsibly.

Our Thoughts on Proof of Work and Proof of Stake

Proof of Work and Proof of Stake both offer different strengths. But when it comes to efficiency, speed, and capital retention, Proof of Stake stands out. Solana builds on that by layering in Proof of History. That design gives it a built-in timeline that supports fast processing and higher throughput. It also helps spread out participation more evenly.

As blockchain continues to develop, we will see more approaches to solving the same three challenges: decentralization, security, and performance. For now, Solana is still setting the pace.

References

Last updated: 7/11/2025