Crypto Academy Week 13- Homework Post For [@alphafx]

Hello everyone, welcome to this post. Hopefully, all of you will be good and enjoying your health. this is my homework post for dear professor @alphafx from Nigeria. I have read the whole of the lecture post of dear sir and I have understood all the points well. Now I am going to discussing the Proof Of Stake which is actually a homework task assigned by the dear professor.

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First of all, I am going to introduce the Consensus Algorithms. so let's start it.

Introduction of Consensus Algorithms:

As all of us know that the Blockchain Technology is spreading widely in this era. Actually, it is the future of the technical world and it is basically based upon and controlled by some important and unique aspects known as Consensus Algorithms. The mechanism or the process in which the system is controlled and managed by some authorities is the Consensus Algorithms. As we know that in centralized financial systems, the overall system is managed and under the control of a single central authority. In the centralized blockchains, the single central authority manages the system according to his will and wishes.

On the other hand, in decentralized blockchains, the overall system is not under the control of a single authority. It is actually controlled and supervised by all the users which are in fact the significant parts of the decentralized system. So in the cryptocurrency, the whole of the information of the users is stored in the database, the Blockchain. It is compulsory for both the developers and the users that they must own copies of that information. In Blockchain technologies, the users that want to set up some blocks must have provided some stakes first. The stakes are needed warmly as the block providers are encouraged if they are doing a good job and are discouraged if they work with dishonesty and in any way wanted to cheat the system. After the development of their blocks, they are rewarded with a specific reward as an appreciation of their work on the block. The last thing is that the detection of cheating and the plagiarized content in the blockchain. All these things are collectively called the Consensus Algorithms.

There is a number of consensus algorithm in a blockchain. Some of them are as follow:

• Proof of Work
• Proof of Burn
• Proof of Stake
• Proof of Capacity
• Proof of Elapsed Time
• Stellar Consensus Protocol

As a detailed note on one of them is asked by the professor so I am going to discuss the Proof of Burn consensus algorithm.

Proof of Burn

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What is Proof of Burn(PoB)?

Proof of Burn is simply known as PoB in blockchain technology. As we know that most of the blockchain networks use the Proof of Work (PoW) and Proof of Stake (PoS) consensus algorithms but the newly developing blockchain networks are using the Proof of Burn (PoB) consensus algorithm. All of the consensus algorithms are needed in a blockchain for security and management purposes.

All the Proof of Work using blockchains creates the miners where the users mine the coins and find out the solutions of the crypto-related problems which they face while doing the processes. First of all only one miner find out the solution to the desired problem and share this solution with all the other users in the same blockchain. Then the solution of the problem is verified and trusted by all the experienced authorities of the blockchain. If the founded solution is true and verified by the authority then the block provider will be rewarded with the specific amount of reward in the form of any related currency of the blockchain.

While on the other hand, in the Proof of Stake using blockchains, there is no hash system but there is a signature system that ensured that the one is the owner of the coin or asset. The users release their coins in the stakes and the more the coins released in the stake, the more will be the chances of one to get more reward as transaction fees. There is no reward system on the blocks in the Proof of Stake system like that of the Proof of Work system. The PoB consensus algorithm is related to both, that the PoW and PoS algorithms.

Explanation of PoB:

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The idea of PoB (Proof of Burn) is represented by many of the crypto legends but the most acceptable among all of them is the concept of Iain Steward. His concept of PoB is more related to that of the Proof of Work (PoW) concept. It looks just like that of the PoW concept but the energy consumption in this consensus algorithm is very low. In the PoB consensus algorithm using blockchains, there is no need of investing the high resources in the network to carry out the block validation. One can easily validate the blocks simply by utilizing a small number of cryptocurrencies or assets he owns. The users which are actually called miners simply invest and mine the assets virtually.

In this type of consensus algorithm, the users or the miners can validate the blocks, or mine the assets simply by the coin burns. Coin burning is a process the result of which the new block validators are selected to validate the blocks keeping in view the power of mining which he owns or has.

Working of PoB:

In the PoB based blockchains, the coins undergo the process of coin burning. Coin burning is the process in which the related coins are sent to valid and unaccessible addresses where these coins are not accessible for any miner or user. The blockchains that use the PoW consensus algorithm are more secure and safe than others as in these blockchains, the users or the investors invest the coins in the system in the hope that these coins will prove profitable for them in the near future. This concept is exactly the same in the PoB using blockchains. But only the difference is in the place of investment of coins. In the PoB using blockchains, the miners or the block creators are rewarded with the specific amount of coins that exceed the amount they invest and in this way results in a profit for them. So in the end, it is better to say that the Proof of Burn (PoB) is the consensus algorithm that involves the process of burning the respective coins of the blockchain.

PoB and PoS:

The relationship between these two consensus algorithms is as follow:

• In the case of both these consensus algorithms, the miners or the users have to invest their coins in the form of a stake in PoS and in the form of Coin Burning in the PoB.

• In PoS, the investor invests the coins in the form of stakes in the blockchain and they can get their coin back whenever they want. So, investment in the PoS is temporary.

• While on the other hand, in the case of the PoB consensus algorithm, the invested coins of the investors undergo the process of coin burning and the investors permanently lost their coins.

Advantages and Disadvantages of PoB:

As we know that nothing is perfect in the universe. The thing which has benefits also has some disadvantages. So now we will discuss the advantages and disadvantages of the Proof of Burn (PoB) consensus algorithm.

Advantages:

• The PoB consensus algorithm is over-lasting and long-term and more sustainable than the other consensus algorithms.

• In PoB, there is no need for hardware miner plants. Instead of them, virtual rigs are available for the mining of coins.

• The process of coin burning reduces the market scarcity of the coins of respective blockchains.

• In the PoB, the distriv=bution of coins in the form of coin burning is less centralized as there is no involvement of central authority in the transactions.

Disadvantages:

• The process of burning coins in the PoB consensus algorithm is not easy and sometimes is not easily verified by the authorities.

• The process of PoB is a more time-consuming and delayed process.

• The burning of coins at a large scale is not a very efficient and fast process.

• It is said that the coins which are burnt through the burning of coins process in the PoB are mostly generated and created through the PoW consensus algorithms which is so many resources consuming.

Conclusions

Every blockchain works on some significant and important managers known as the consensus algorithms. There are so many consensus algorithms and different blockchains work on different consensus algorithms. Proof of Burn (PoB) is also a consensus algorithm that is related to that of the PoW ( Proof of Work) and PoS ( Proof of Stake) consensus algorithms. Proof of Burn works on a process in which coins undergo the burning called the Burning of Coins.

So, that's all about today's home task. Hopefully, all of you will like this post.

Special mention dear sir @alphafx to review out my this post ASAP.

Thanks a lot.

Credits:

@steemlover63