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The Gulf Between Masternoding, Proof of Work, and Proof of Stake

With the popularity surge and the various updates that blockchain technology is bombarded with, it needs a reliable, secure, and efficient algorithm to ensure all the transactions are authentic. Thus, a new algorithm by the name Consensus Mechanism has been introduced in the blockchain technology to certify the legitimacy of the activities being carried out.

Now, cryptocurrency has incorporated various consensus mechanisms as well to establish a safe database by keeping a record of your transactions. A consensus mechanism is basically a fault-tolerant mechanism that refers to processing all the nodes to achieve agreement, trust, and reliability. Thus, Proof of Stake, Proof of Work, and Masternoding (Proof of Service) are the prevalent consensus mechanisms that have been stealing the light lately.

Proof of Work

Proof of Work is the very first decentralized consensus mechanism based on balancing the order of transactions. A certain number of trailing zeroes are assigned to each transaction, and the transactions are not verified unless the specified number of trailing zeroes matches the hash value. This protocol was invented to prevent DDoS and other malicious attacks.

Proof of Stake

Proof of Stake is also a popular consensus mechanism created as an alternative to Proof of Work. It validates the transactions based on the number of tokens a user holds. The more tokens he holds, the more power he’s granted, as with each transaction being verified, another block is added to the chain.


Masternodes, also known as Proof of Service, is a different class of Consensus mechanisms that provides special security to the verified blocked transaction instead of adding another block in the blockchain.

What Makes Proof of Work, Proof of Stake, and Proof of Service Different?

Now the question arises; what makes these different consensus mechanisms different from one another when they have the same purpose? Well, despite having the same focal point, these protocols are still very much different in terms of functions, energy efficiency, risks, and coins.


As their name suggests, Proof of Work is based on Mining, proof of stake is based on Staking, and Proof of Service (Masternoding) is based on Servicing.

In PoW, the miner is given a mathematical equation to prevent any outsider from getting into the system. PoS is based more on the property. The crypto owners stake their coins to support blockchain and verify transactions along with earning rewards in return. In contrast, the basis of Masternoding is quite different than PoW and PoS. It is based on a collateral system where the holder has rewarded a percentage of their stake for their investments in time. Thence, Staking and Servicing are much easier and rewarding comparatively.

Environment Sustainability

In PoW, mining requires a huge amount of energy to operate. Whereas, PoS and Masternoding give mining power based on holdings and investments, making them much more environmentally sustainable than PoW as they do not require ample fuel and energy consumption.


PoW is undoubtedly well-tested, whereas PoS and Masternoding are nearly battle-tested, yet still, PoW has more malicious and economic risks associated with it than the other two protocols. PoS and Masternoding are more decentralized than PoW that helps with the network scalability and speedier transactions to keep the assets safe from hacks and attacks.


Proof of Work: Ethereum, Bitcoin, Dogecoin, Litecoin, etc.

Proof of Stake: Binance, Solana, Cardano, Polkadot, Cosmos, and other Altcoins.

Proof of Service/Masternoding: Dash, Chaincoin, ZCoin, ALQO, PIVX, and other masternode currencies.

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