Cryptocurrency 101: Understanding the two main consensus mechanism
The world of cryptocurrency is a complex and rapidly developing space, and new techniques and consensus mechanisms are created regularly. Cryptocurrency is based on a decentralized network at the heart, which allows users to manage their own events and property without the need for brokers, such as banks or governments.
In this article, we deepen the two most commonly used consensus mechanisms of the cryptocurrency: proof of work (POW) and evidence of the share (pos). These mechanisms are crucial to the functioning of different cryptocurrencies and have significant effects on their safety, scalability and deployment.
Certificate of Work (POW)
Pow is the most commonly used consensus mechanism in cryptocurrency. It was first introduced with Bitcoin’s 2008 hard fork, and many other cryptocurrencies, such as Ethereum, Monero and Litecoin, have approved it.
At POW, mining workers’ network competes to solve complex mathematical puzzles to validate Blockchain events. These puzzles are designed to be difficult to solve with the current computer flow, so the term “proof of work”. The first ministry to solve the puzzle adds to the block chain of the new transaction block and is rewarded with a recent cryptocurrency.
This is how it works:
- Mining workers collect and check transactions in the block chain.
- The ministry selects the events of the group to be included in a new block (“block fee”).
- The miner will calculate mathematical puzzles in the group selected for each event.
- The first ministry to determine the puzzle, known as “work certificate”, is rewarded with a recent cryptocurrency and the right to add the following transaction block to the block chain.
Pow’s Benefits:
- Energy efficiency
: POW requires significant computational force, which reduces energy consumption.
- Safety : The use of complex mathematical puzzles makes it difficult for harmful actors to manipulate the network.
- Scalability : POW can handle a large number of events per second.
Disadvantages of POW:
- Energy consumption : The energy needed for cryptocurrency well is significant, which affects greenhouse gas emissions and environmental problems.
- Centralized supervision : Mining pools, often dominated by large companies or countries, can lead to network concentration.
Reservation (POS)
POS has gained popularity as a more energy efficient alternative to Pow. It was first introduced with the hard fork of Ethereum 2016, and then many other cryptocurrencies have approved it.
At POS, validators are selected to create new blocks based on the balance of the encryption currency in its wallets. Validates with a greater amount of cryptocurrency (ie those who own more) have a greater chance of being selected to participate in the validation process.
This is how it works:
- Users deposit their cryptocurrency in your wallet or exchange.
2.
- The best-placed user in the pool is selected as a valider.
Benefits of POS:
- Energy efficiency : POS requires significantly less energy than Pow, which makes it more environmentally friendly.
- Increased safety : Validans have more control over their property, and harmful actors are less likely to manipulate.
- Reduced transaction fees : As the number of validators increases, as well as fees related to validation events.
Disadvantages of POS:
- Concentration : The use of a random selection pool can lead to network concentration if a small user group controls it.
- slower block times : POS can be slower than POW, as the validation process lasts longer due to the need for several validators.
No responses yet