What is the difference between proof of work and proof of stake?

For traders, the difference matters for: staking yield opportunities (PoS coins can be staked for passive income), environmental concerns affecting institutional adoption, and network security considerations.

PoW (Bitcoin): miners solve complex puzzles using energy to validate transactions and earn rewards. Secure but energy-intensive. PoS (Ethereum): validators stake ETH as collateral to validate. More energy efficient but different security model.