What is proof of stake?  A computer scientist explains a new way to make cryptocurrencies, NFTs, and metaverse transactions

What is proof of stake? A computer scientist explains a new way to make cryptocurrencies, NFTs, and metaverse transactions

Proof of Stake is a mechanism for achieving consensus on the blockchain. Blockchain is a technology that records transactions that cannot be deleted or changed. It is a decentralized database, or ledger, that is not under the control of any person or organization. Since no one controls the database, consensus mechanisms such as Proof of Stake are necessary to coordinate the operation of blockchain-based systems.

While Bitcoin With the popularization of technology, blockchain is now part of many different systems, enabling interesting applications such as decentralized finance platforms and non-fungible tokens, or NFTs.

It was the first large-scale commercial blockchain consensus mechanism proof of work, which enables users to reach a consensus by solving complex mathematical problems. To solve these problems, users are usually provided a quota in the system. This process, called mining, requires large amounts of computing power. proof of stake It is an alternative that consumes much less energy.

In essence, blockchain technology provides Three important characteristics:

  1. Governance and Decentralized Operation – The people who use the system must collectively decide how to manage and operate the system.
  2. Verifiable Status – Anyone using the system can validate the system, so that each user is able to ensure that the system is currently working as expected and has been since its inception.
  3. Flexibility in the face of data loss – Even if some users lose their copy of system data, whether through negligence or a cyber attack, this data can be recovered from other users in a verifiable manner.

The first property, decentralized management and operation, is the property that controls the amount of power needed to operate a blockchain system.

Voting in blockchain systems

Blockchain systems use voting to decentralize governance and operation. While the exact mechanisms of how voting and consensus are achieved in each blockchain system varies, at a high level, blockchain systems Allow each user to vote on how the system worksand whether any particular operation – accepting a new block in the chain, for example – should be approved.

Traditionally, voting requires that the identity of the people casting a vote can be known and verified to ensure that only eligible people vote and do so only once. Some blockchain systems allow users to provide a digital ID to prove their identity, enabling voting with minimal energy use.

Comparison of Proof of Work and Proof of Stake.

However, in most blockchain systems, users are anonymous and do not have a digital identity that can prove their identity. So, what prevents an individual from pretending to be many individuals and casting many votes? There are several different methods, but the most widely used is Proof of Work.

In Proof of Work, users get votes based on how much computational power they have in proportion to other users. They demonstrate their ownership of this computational power by solving difficult mathematical problems. If a user can solve twice as many problems as another user, they will have twice the arithmetic ability as other users and get twice as many votes.

However, solving these mathematical problems requires a lot of energy, leading to complaints that the proof-of-work is not sustainable.

proof of stake

To address the power consumption of the Proof of Work, another method is needed to validate the users. Proof of stake is one such method. In Proof of Stake, users verify their identities by proving ownership of certain assets on the blockchain. For example, in Bitcoin, this would be the ownership of Bitcoins, and in Ethereum, it would be the ownership of Ether.

Although this requires users to temporarily lock their assets into the blockchain for a period of time, it is much more efficient as it requires minimal energy expenditure. At the discretion of the company, moving from Proof of Work to Proof of Stake Ethereum energy consumption reduced by 99.95%.

Ethereum integration

this is improve energy efficiency This is why many blockchain systems intend to move from Proof of Work to Proof of Stake. Ethereum plans to make this change during the week of September 15, 2022. This is known as consolidation. During this merge, the processes will shift from voting on using Proof of Work to voting on using Proof of Stake. Upon completion of the merger, only proof of stake will be used to vote on the transactions.

The hope is that this will create Ethereum to be sustainable for the foreseeable future.

The Ethereum Consolidation is set to transform one of the largest blockchains into an energy-efficient and proof of stake technology.

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