How the two algorithms compare

Consensus algorithms are processes where validators (also known as nodes or miners) within a blockchain network agree on the current state of the network. This mainly entails agreeing on whether a transaction submitted by a validator is authentic. Fraudulent or inaccurate transactions are rejected by the network assuming all validators are acting fairly with no malicious intent. Validators are rewarded with cryptocurrency for submitting accurate and authentic transactions, whilst malicious actors are penalized depending on the consensus protocol. 

For example, in proof-of-work (PoW) networks like Bitcoin (BTC), validators have to spend energy via expensive hardware to validate transactions, and if successful, they gain new tokens. If they act maliciously they gain nothing and the loss comes from the wasted energy used in submitting the fraudulent or inaccurate transaction.

In proof-of-stake (PoS) users stake tokens and receive additional tokens for submitting authentic transactions, while losing a portion for submitting wrong transactions.

In proof-of-time (PoT) protocols the principle is the same, with validators receiving additional tokens for submitting authentic transactions but lose tokens for submitting inaccurate or malicious transactions.

While PoS and PoT share some similarities, they are two very different protocols.

What is proof-of-stake?

PoS is a consensus algorithm that works by users staking their tokens as collateral by locking them into a smart contract. The system works by selecting a validator, also known as miners or nodes, to process a block of transactions. The validator has to validate the transactions inside the block to ensure that there is no inaccurate information contained within.

Next, the validator submits the block to the blockchain and if the block has been validated correctly, they receive additional tokens as a reward. If a validator behaves in a malicious or lazy manner, usually by submitting incorrect or fraudulent transactions, they lose a portion of the tokens they have staked.

Validators who staked a higher amount of tokens are more likely to be selected to verify transactions. Staking a higher amount of tokens also earns the validator additional rewards since they typically earn a fixed percentage based on the blockchain network. For example on Ethereum 2.0, validators currently earn 4.2% on their tokens. Validators are also more likely to be selected if they have staked their tokens for a longer period of…