Proof of Work (PoW) and Proof of Stake (PoS) are the two most prevalent consensus mechanisms in blockchain networks. Consensus mechanisms are the rules by which a distributed network agrees on the state of the ledger.
In PoW, miners compete to solve computationally expensive puzzles to add new blocks to the chain. The first to solve the puzzle earns the block reward. This mechanism is energy-intensive but has proven highly secure — Bitcoin has operated on PoW since 2009. The cost of a 51% attack on a large PoW network is enormous.
In PoS, validators lock up (stake) tokens as collateral to earn the right to validate transactions. Validators are selected to propose blocks based on their stake, and they earn rewards for honest behavior. Ethereum transitioned from PoW to PoS in 2022 (the Merge), reducing its energy consumption by over 99%. PoS generally allows for faster finality and lower transaction fees.