As cryptocurrency technology evolves it’s quite clear we are all in a fast paced, constantly adapting environment. During the last decade, the pace of advancement has been breathtaking. Yet evolution will continue, perhaps exponentially, as there will always be challenges left for bright minds to solve.
One of these such advancements within cryptocurrency, has been the creation of Proof of Stake systems. The usage of these secure blockchains has increased dramatically over the last year. But why? What is the reason Proof of Stake has become so popular with blockchain based projects?
Today we hope to provide answers on those very questions, plus explain how Renos stands out from the crowd within the PoS-based communities.
The Proof of Work (PoW) Dilemma
Since Bitcoin’s inception, PoW has been widely used to secure and validate transactions on the blockchain. In the beginning, all users had to do was leave their computers running to support the network and they would be paid in newly mined Bitcoins.
This worked fine for awhile, but as specialized mining equipment was invented (ASICs), participation of transaction security shifted away from the individual user and became centralized in the hands of huge mining farms. The main dilemma with PoW: no consensus is truly available for the masses.
While PoW functions, often times it no longer represents the best interests of the network users, but rather those of large corporations or very wealthy individuals.
A second consideration is the total energy costs for PoW systems, stemming from the power consumption created by these specialized miners. The Bitcoin network already consumes more power than some developing countries do! With soaring energy costs in some areas of the world, many communities could be excluded from being able to fully utilize cryptocurrency.
So, we had to ask ourselves… is there a better way?
The Proof of Stake Upgrade
Lately, a lot of projects are adopting or creating from scratch a new form of governance and transaction verification. It’s called Proof of Stake (PoS) and in many ways it’s a cutting-edge upgrade to cryptocurrency projects.
Where PoW tends to secure its chain through expensive mining operations, PoS does this without the high energy cost of miners. Transaction verification is accomplished by those who stake their holdings, thus allowing for community members to be paid for security, rather than centralized mining farms.
An added benefit of PoS is that consensus is easily formed because all stakers and holders end up on a more fair and even ground. PoS systems don’t experience the centralization of aggressive mining operations, and in turn project communities can determine the project’s future.
PoS is the next step in the ever growing evolution of cryptocurrency. There’s always more on the way, but overall this system tackles many important key factors to harbor trust, consensus, and proportional rewards for all participants.