Different Validation Methods in Crypto

Validation methods in the cryptocurrency space are for ensuring the security, integrity, and functionality of blockchain networks. They are the key to the technology, how decentralisation is made possible.

These methods verify transactions, maintain consensus among network participants, and prevent double-spending. Here, we’ll explore several common validation methods:

Proof of Work (PoW):

PoW requires network participants, more commonly known as miners, to solve complex mathematical puzzles to validate and add new information (blocks) to the blockchain. Miners compete to find the solution, and the first one to do so broadcasts the block to the network for verification.

Example: Bitcoin, the first and most well-known cryptocurrency, relies on PoW. Miners use computing power to solve cryptographic puzzles, and the successful miner is rewarded with newly minted bitcoins. Roughly every four years, the reward is halved.

Proof of Stake (PoS):

PoS validates transactions and creates new blocks based on the amount of cryptocurrency a validator holds and is willing to “stake” as collateral. Validators are chosen to create new blocks based on their stake, and they are rewarded with transaction fees or newly minted coins.

Example: Ethereum has been transitioning from PoW to PoS with its Ethereum 2.0 upgrade. In PoS, validators are selected to create blocks based on the amount of ether they hold and are willing to stake. Individual holders can stake their ether through validators and get a share of the reward.

Delegated Proof of Stake (DPoS):

DPoS is a version of PoS where participants vote for a limited number of delegates to validate transactions and create new blocks on their behalf. Delegates are typically entities trusted by the community.

Example: EOS utilizes DPoS, where token holders vote for block producers to validate transactions and maintain the network. These elected block producers are responsible for confirming transactions and adding new blocks to the EOS blockchain.

Proof of Authority (PoA):

In PoA, a limited number of pre-approved participants, (validators or authorities), are responsible for validating transactions and adding blocks to the blockchain. Validators are typically known and trusted entities.

Example: The Kovan testnet for Ethereum employs PoA. Validators are organizations or individuals who have been approved to participate in the consensus process. This method is efficient for test environments but less decentralized compared to other methods.

Proof of Burn (PoB):

PoB involves participants burning (sending to an unusable address) some of their own cryptocurrency tokens to prove their commitment to the network. The act of burning tokens grants the right to participate in block creation or other activities.

Example: Slimcoin, an experimental cryptocurrency, used PoB as part of its consensus mechanism. Participants burned coins to earn the right to mine new blocks, thus demonstrating their investment in the network’s success.

Proof of Space (PoSpace):

Description: PoSpace validates transactions and creates new blocks based on the amount of available storage space a participant dedicates to the network. Participants demonstrate their commitment by allocating disk space rather than computational power.

Example: Chia Network utilizes PoSpace, where farmers allocate disk space to store cryptographic hashes rather than solving complex mathematical puzzles. Farmers are rewarded with newly minted chia coins for providing storage space.

Proof of Elapsed Time (PoET):

Description: PoET is a consensus mechanism designed to reduce energy consumption by relying on a random leader election process. Participants must wait for a randomly generated time period before being eligible to create a new block.

Example: Sawtooth, a blockchain platform developed by Intel, uses PoET. Participants compete to be selected as the next block creator by waiting for a randomly generated time period, thus reducing the energy consumption associated with traditional PoW mechanisms.


All of these validation methods vary in their resource requirements, decentralization, and security. While PoW and PoS are the most widely known and used thanks to the market cap of Bitcoin and Ether, other methods such as DPoS and PoA offer alternatives with different trade-offs.