Steemit Crypto Academy Week 13: Homework Post for Crypto professor @alphafx

Hello my steemit friends and followers welcome to my homework post about Consensus Algorithm- Proof of Burn given by the professor that goes by the name @alphafx.

Define Consensus Algorithm
A consensus Algorithm can be define as a strategy that a group of computers use to agree between each other on what is true, there is different kind of consensus algorithm that people apply and each have different properties in terms of how secured the agreement is and who gets to vote on what but in general the purpose of consensus algorithm is just to manage which participant in the network gets to set the state of truth that every one follows and agrees on.

There are different consensus algorithm used by various crypto project like the Ethereum uses proof of work (POW) consensus algorithm, Tron uses proof of stake (POS) while Bitcoin and litecoin uses the proof of work too.

Proof of Burn

This is the method for distributed consensus it is a alternative to proof of work and proof of stake, it can also be used for bootstrapping one cryptocurrency off of another.

How does Proof of Burn (PoB) works

All proof of burn cryptocurrencies work by burning proof of work mined cryptocurrencies so the ultimate source of scarcity remains the proof of work mined fuel, A specific portion of coins in circulation is sent to a wallet no one can access This effectively eliminate these coins from being spendable although they will still be part of all the existing coins ever to be generated.

Advantages of Proof of work (POW)
1). Very low energy consumption
2). No need to invest in very powerful hardware
3). Lower artificial price swings of the mining hardware investment or circle or the influence of multipool
4). No simple Rich get richer mechanism because proof of burn rewards entrepreneurial risk not wealth

Disadvantages of proof of burn
1). It is risky investment because if invested it is not a 100% assurance that you will get all your investment back
2). Investors with higher capital to burn have higher chances of getting blocked rewards

Comparison Between POB and POW

Proof of burn	Proof of work
1). Miners must solve advanced puzzles	Miners mine coin by burning coin
2). Block Rewards that are given depend on the number of puzzles solved	Miners are rewarded with coins depended on the number of coins burned
3). High cost of mining	Low cost of mining.
4). Bigger energy consumption	small energy consumption

Cryptocurrencies that uses Proof of Burn

1). Counterparty: Counterparty also known as XCP was created through the proof of burn and it is done in the process were users sends BTC to a verified address (unaccessible) and in return get XCP

2). Slimcoin: This is the type of cryptocurrency that uses the proof of burn, proof of work and proof of stake for the creation of the the coin and as well use Proof of Burn (PoB) to burn the crypto.

3). Factom: This is the crypto that uses the proof of burn to there make it scarce, The network constantly mint new coins and also burn it off.