Steemit Crypto Academy Contest Season 1 Week 3 - Blockchain through the concepts by @srrebullient
Hello everyone, I am glad to be taking part in the third week of the SteemitCryptoAcademy engagement contest.
In this week's contest which is titled Blockchain through the concepts, we have been asked to discuss on any blockchain term, so let's go!
The fact that cryptocurrencies are not under the control of any formal head which is a term we regard as decentralization, has brought in various ways cryptocurrency transactions can be properly verified and this is what has lead to the emergence of Proof-of-stake consensus mechanism.
Proof-of-Stake is one of the various types of consensus mechanisms used in validating cryptocurrency transactions. It does this by allowing coin owners to stake their coins and in turn operate as validator nodes.
To know more about staking, you can visit one of my articles using this link.
The validator node whose work is to verify transactions and add accurate ones to the blockchain gets randomly selected by the Proof-of-Stake protocol whenever there's a block of transactions ready to be processed.
This verification is done with a lot of accuracy as a validator node will certainly lose some of its stakes if there's a proposal of adding an inaccurate transaction to the block.
Choosing validators differs with each Proof-of-Stake protocol as some choose based on how long a node has been active whereas some choose based on the quantity of stake.
The latter has to lead to some individuals coming together in other to increase their chances of being selected to validate transactions and they in turn share the rewards amongst themselves.
The Proof-of-Stake consensus mechanism is important in the blockchain due to several reasons which include;
- Decentralization
The Proof-of-Stake protocol operates in a decentralized manner as those who stake their coins in other for it to be used in verifying transactions all earn rights to decision making on the blockchain platform.
This governance right allows them to either accept or reject proposals with the final decision being made in consideration with the decision of the majority.
- Scalability
Scalability is one of the major problems with Proof-of-work which explains why new blockchains do not longer operate using such protocol.
The Proof-of-Stake has more scalability due to its ability to verify multiple transactions very fast and efficiently thus encouraging high transaction speed.
- Low energy consumption
This is also one of the problems with proof-of-work that lead to the emergence of Proof-of-Stake. Miners in Proof-of-work perform their mining activities using higher energy consumption computers that perform complex mathematical calculations. But in Proof-of-Stake, transactions are verified by nodes through their staked coins.
- Low transaction cost
The Proof-of-Stake consensus mechanism also operates on lower transaction costs when compared to other protocols such as proof-of-work with an example seen on the cost of transaction in Cardano and Ethereum blockchain respectively.
Most apparently, the existence of blockchain is totally independent of the Proof-of-Stake consensus mechanism and the reason being that there are other mechanisms used by various blockchains in verifying tractions and they include;
- Proof-of-work
- Proof-of-brain
- Delegated Proof-of-Stake
- Leased Proof-of-Stake, etc.
- Proof-Of-Burn
- Proof-of-Authority
- Proof-of-Elapsed Time
- Proof-of-capacity
- Proof-of-Activity
- Proof-of-importance
- Direct Acyclic Graphs (DAGs)
- It Takes Two To Tangle (IOTA)
- Byzantine Fault Tolerance, etc.
Another evidence that the blockchain's existence isn't tied down to Proof-of-Stake is the very fact that the Bitcoin blockchain which uses a proof-of-work consensus mechanism has been in existence before the emergence of Proof-of-Stake.
In the Proof-of-Stake protocol, rewards are distributed based on the number of holdings with larger holders earning more rewards in form of incentives thus leaving smallholders will fewer rewards.
The fact that some Proof-of-Stake protocols select validators based on the quantity of stake, makes large holders enjoy much influence during transaction verification and this leads to the discouragement of users with small stakes.
In addition, some Proof-of-Stake protocols do not allow users to unstake their coins at any time of choice rather staked coins are locked up for a specified period thus leaving the owner with the ability to trade them.
Also, there's not enough security in Proof-of-Stake when compared to proof-of-work.
The Proof-of-Stake consensus mechanism can be improved if users can earn more rewards on their stakes because the incentive earned on staked tokens is significantly small thus making most investors rather provide liquidity with their tokens and earn interests which is much higher than incentives earned on stakes.
The Proof-of-Stake consensus mechanism remains among the best consensus mechanism due to its scalability, efficiency, and low transaction fee.
In as much as this mechanism is effective, it is not efficient due to its lack of maximum security when compared to the likes of proof-of-work.
I like your explanation about the Proof-of-Stake. Low energy consumption and low cost of transaction serves as an advantage but cannot be compared with the Proof-of-Work in terms of security.
Thanks for sharing.
You're right. The Proof-of-work has tremendous security due to its complex means of verifying transactions and adding them to the block.
Thank you for your comment.
The proof of Stake is a really interesting concept of Blockchain.
Without Consensus mechanism, it will be impossible for the nodes in a Blockchain to be able to communicate.
The nodes needs to reach an agreement on how to validate a node..
Thank you for sharing man. Hope we can comment to keep sharing.
You're absolutely right. It's more like a collective work where all nodes work together to maintain the efficiency of the blockchain.
Thank you for your comment.
There are many consensus algorithms used across many blockchains but proof-of-stake is indeed one of the best. Yeah, proof-of-stake is generally considered a better consensus algorithm than the proof-of-work. Thanks for sharing!
It was a good read!
Yeah.. It's actually same thing for me because I will choose POS over most consensus mechanism.
Thank you for your comment
Proof of stake is an amazing concept in the blockchain, it doesn't requires much energy consumption compared to proof-of-work, it picks validator randomly and the high stakers have chances of being chosen which is one of the flaw.
You've picked and discussed a good topic, I enjoyed reading.
You have said really well. I'm impressed by the level of your understanding of POS.
Thank you
This what made me smile, seeing a win win situation, just makes me happy. For this I totally agree with you that Proof-Of -Stake also known as (POS) is the best consensus mechanism.
When I first heard of POS I taught you were talking of Point-of-Sale machines. But now I know better, thanks for sharing such awesome knowledge.
I'm glad you found some interesting features on the Proof-of-Stake consensus mechanism through my post.
I really appreciate your nice comments.
Thank you so much
Well-done for making proof of Stake very simple, I had to run away from it because I felt it would be complex. Nice job
I'm glad you found my post really interesting and self explanatory.
I look forward to reading your own.
Thank you for stopping by.
You did Justice to this topic, well explained and nicely written. Launching proof-of-stake was to address the shortcomings of proof-of-work.
Thank you so much for your warm comment. It's really encouraging.
Wow, I really enjoyed going through your article, I must admit that it is perfect.
Blockchain does not have to depend on POS consensus mechanism because they are other mechanism that can be used.
Thanks again for sharing
Thank you so much for you warm comment I really appreciate.
tremendo resumen de verdad me alegra leerte
I'm happy you found it interesting. Thank you for dropping by.