Proof of stake vs proof of work
The Ethereum community has been working to change the way the currency is created in order to radically reduce the carbon footprint of the blockchain. The method being worked on is called Proof of Stake (PoS).
Most databases set permissions on who can access and edit them. This centralized control is convenient, but it makes them vulnerable to hacks. In contrast, blockchains make everyone who runs the software-from the exchange platforms to the operators at their core-responsible for updating it.
To prevent attacks, which allow funds to be spent twice, Bitcoin uses the proof-of-work consensus algorithm. This system asks people to use hardware and electricity to help the network process transactions. In proof-of-work, miners (or, their computers, to be precise) try to solve fiendishly difficult puzzles to be the first to complete a block of transactions. Their work helps verify that the transactions are legitimate. As compensation, they are rewarded with cryptocurrencies such as Bitcoin.
Blockchain proof of stake
The cryptocurrency world has been adapting to current demands and generating new consensus algorithms with better functionalities. The first consensus algorithm was the Proof of Work algorithm, but today there are several protocols such as Proof of Stake and Proof of Space.
Specific consensus algorithms offer certain advantages over others. For example, the Proof of Stake algorithm is a more secure, faster and cheaper consensus protocol than Proof of Work. LaneAxi s, the world s direct load network without load brokers, uses a Proof-of-Participation algorithm to ensure fast transactions and increased security and privacy.
The main reason for this network congestion is that Proof of Work relies on hardware mining capabilities, an energy-intensive process. Recently, Bitcoin mining was restricted in China due to its extensive energy usage and excessive carbon footprint.
However, a new protocol called Proof of Stake does not use mining hardware to create new tokens to counter this problem. It relies on staking existing tokens to validate new transactions and develop new tokens. Because it does not rely on mining hardware, it requires significantly less energy and has lower overall costs along with a significantly reduced carbon footprint.
What is proof of stake
In essence, the New York Times was printing hash signatures in 1995. The purpose of these signatures was to sign all digital documents sent to Surety (read here ). In principle, this was the first blockchain. It allowed someone to prove that a digital document is not tampered with. So, it was sent to Surety, a company that created a hash for this document and you can use this hash to prove that your document is not altered. In addition, you can also prove that your document was published at a certain point in time.
These points in time are the publication times of the New York Times with the hash signature. This hash signed the collection in which the signature of your specific document was included. These collections are blocks and each newly published New York Times hash verified the previous blocks. Although it is not called that, it is a blockchain.
The paper published by Haber and Stornetta dates back to 1991 and Surety was offering its services in 1995. So could Bitcoin have been realized back then? No. This approach works well for signing digital documents because trusting Surety is on a different level for these signatures than for a cryptocurrency. The service offered by Surety was not decentralized. So you had to trust Surety, that they would not alter your documents.
Proof of stake
When we talk about Proof of Work (PoW) and Proof of Stake (PoS), we are talking about a high level of software algorithms used on cryptocurrency platforms to reach consensus (validation) on blockchain networks.
As the name implies, Proof of Work (PoW) refers to the work done by processing equipment (hardware) to validate transactions on a cryptocurrency platform. Use is made of this method to validate and confirm the authenticity of the chain.
In this method, to validate and confirm transactions on blockchain, validators -equivalent to miners in the PoW system-, are selected based on how many cryptocurrencies they hold and how much time has passed since they obtained them.
Coins held by a validator show how committed the validator is. The amount of time that has passed since a validator has been holding their coins can be referred to as the expiration date. A person with larger amounts of coins, over a longer period of time, will have a greater chance of validating a block.