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Blockchain Proof Of Stake

Top Proof-of-stake (pos) Cryptocurrencies: Hold, Validate, And Earn

Top Proof-of-stake (pos) Cryptocurrencies: Hold, Validate, And Earn

Relatively new to the crypto space and doing your homework? Good for you. Youve come to the right place to learn a little more. Today, well be talking about interesting crypto currencies you can stake with. Undoubtedly, one of the first concepts youll run into in the ecosystem is the idea of cryptocurrency mining. And then mining leads you down the rabbit hole toward more technical concepts, like the ideas of Proof-of-Work (PoW) and Proof-of-Stake (PoS) . It can all seem quite dense at first, but its actually pretty straightforward when it comes to how easy it is to get a functional literacy of the concepts in question. PoS is particularly interesting because a growing portion of the cryptocurrency arena is trending toward it presently. Even Bitcoins impending Lightning Network upgrade seems to forebode a PoS-like system, even though the main Bitcoin chain will continue to rely on PoW. So, first lets briefly walk through what exactly Proof-of-Stake is before turning to discuss what some of the most promising PoS projects are to date. The Proof-of-Work concept as applied to cryptocurrencies was developed by early innovators in the space like Hal Finney and Adam Back. To translate in laymans terms, PoW is a way to achieve consensus among the distributed parties of the Bitcoin network. The viability of the nework is guaranteed, then, by the Bitcoin miners who lend large amounts of computing power (and electricity, in extension) to solve difficult cryptographic puzzles. Proof-of-Stake is a much newer proposed methodology for achieving distributed consensus. The viability of networks relying on PoS are not achieved by mining but rather by staking. Staking, simply put, is just when users hold their PoS-compatibile cryptocurrencies in a specialized staking wallet. Staking ach Continue reading >>

What Is Proof Of Stake? Hacker Noon

What Is Proof Of Stake? Hacker Noon

The proof of stake system is attracting a lot of attention these days, with Ethereum switching over to this system from the proof of work system. Proof of stake is an alternative process for transaction verification on a blockchain. It is increasing in popularity and being adopted by several cryptocurrencies. To understand proof of stake, it is important to have a basic idea of proof of work. As of this writing, the proof of work method is used by Bitcoin, Ethereum and most other major cryptocurrencies. Proof of work is a mining process in which a user installs a powerful computer or mining rig to solve complex mathematical puzzles (known as proof of work problems). Once several calculations are successfully performed for various transactions, the verified transactions are bundled together and stored on a new block on a distributed ledger or public blockchain. Mining verifies the legitimacy of a transaction and creates new currency units. The work must be moderately difficult for the miner to perform, but easy for the network to check. Multiple miners on the network attempt to be the first to find a solution for the mathematical problem concerning the candidate block. The first miner to solve the problem announces their solution simultaneously to the entire network, in turn receiving the newly created cryptocurrency unit provided by the protocol as a reward. As more computing power is added to the network and more coins are mined, the average number of calculations required to create a new block increases, thereby increasing the difficulty level for the miner to win a reward. In proof of work currencies, miners need to recover hardware and electricity costs. This creates downward pressure on the price of the cryptocurrency from newly generated coins, thus encouraging m Continue reading >>

Proof Of Work Vs Proof Of Stake: Basic Mining Guide

Proof Of Work Vs Proof Of Stake: Basic Mining Guide

Proof of Work vs Proof of Stake: Basic Mining Guide Angel Investors, Startups & Blockchain developers... Recently you might have heard about the idea to move from an Ethereum consensus based on the Proof of Work (PoW) system to one based on the so-called Proof of Stake. In this article, I will explain to you the main differences between Proof of Work vs Proof of Stake and I will provide you a definition of mining, or the process new digital currencies are released through the network. Also, what will change regarding mining techniques if the Ethereum community decides to do the transition from work to stake? This article wants to be a basic guide to understanding the problem above. First of all, lets start with basic definitions. Proof of work is a protocol that has the main goal of deterring cyber-attacks such as a distributed denial-of-service attack (DDoS) which has the purpose of exhausting the resources of a computer system by sending multiple fake requests. The Proof of work concept existed even before bitcoin , but Satoshi Nakamoto applied this technique to his/her we still dont know who Nakamoto really is digital currency revolutionizing the way traditional transactions are set. In fact, PoW idea was originally published by Cynthia Dwork and Moni Naor back in 1993, but the term proof of work was coined by Markus Jakobsson and Ari Juels in a document published in 1999. But, returning to date, Proof of work is maybe the biggest idea behind the Nakamotos Bitcoin white paper published back in 2008 because it allows trustless and distributed consensus. Whats trustless and distributed consensus? A trustless and distributed consensus system means that if you want to send and/or receive money from someone you dont need to trust in third-party services. When you use tra Continue reading >>

Proof Of Stake - Bitcoin Wiki

Proof Of Stake - Bitcoin Wiki

Proof of Stake is a proposed alternative to Proof of Work . Like proof of work, proof of stake attempts to provide consensus and doublespend prevention (see "main" bitcointalk thread , and a Bounty Thread ). Because creating forks is costless when you aren't burning an external resource Proof of Stake alone is considered to an unworkable consensus mechanism. [1] It was probably first proposed here by a member named QuantumMechanic . With Proof of Work, the probability of mining a block depends on the work done by the miner (e.g. CPU/GPU cycles spent checking hashes). With Proof of Stake, the resource that's compared is the amount of Bitcoin a miner holds - someone holding 1% of the Bitcoin can mine 1% of the "Proof of Stake blocks". Some argue that methods based on Proof of Work alone might lead to a low network security in a cryptocurrency with block incentives that decline over time (like bitcoin) due to Tragedy of the Commons , and Proof of Stake is one way of changing the miner's incentives in favor of higher network security. A proof-of-stake system might provide increased protection from a malicious attack on the network. Additional protection comes from two sources: Executing an attack would be much more expensive. Reduced incentives for attack. The attacker would need to own a near majority of all bitcoin. Therefore, the attacker suffer severely from his own attack. When block rewards are produced through txn fees, a proof of stake system would result in lower equilibrium txn fees. Lower long-run fees would increase the competitiveness of bitcoin relative to alternative payments systems. Intuitively reduced fees are due to vast reductions in the scale of wastage of resources. If a single entity (hereafter a monopolist) took control of the majority of txn verifi Continue reading >>

Top 7 Profitable Proof Of Stake (pos) Cryptocurrencies

Top 7 Profitable Proof Of Stake (pos) Cryptocurrencies

Top 7 Profitable Proof Of Stake (POS) Cryptocurrencies By: Sudhir Khatwani In: Cryptocurrency Last Updated: Lets talk about popular proof of stake cryptocurrencies today And I know one more important question that might cross your mind would be:-Whyproof of stake cryptocurrencies? Why should one know them? Whats so special about them? So to answer such questions lets get started Proof of stake (aka POS) cryptos has many technical benefits but apart from that some proof of stake cryptos also give different economic benefits/dividends to its HODLers by giving them the option of running a masternode or staking their coins in a stake-able wallet. To simply put into perspective i.e you can earn by just holding many POS cryptocurrencies. This provides dual benefits of securing the blockchain network as well as creating an opportunity for users to get incentives or dividends on their holdings. I have already written in detail about the distributed proof of stake (POS) cryptocurrencies and its consensus mechanism in my previous article which you can read here . But for the newcomers, let me explain what distributed consensus and POS is: Distributed consensus simply means a large pool of people who are geographically segregated agreeing on something. In cryptocurrencies like Bitcoin , something here means agreeing on which transactions or blocks are valid and which are invalid to be added/rejected to the blockchain. Proof of stake is a typical computer algorithm through which some cryptocurrencies achieve their distributed consensus. Itis also a better alternative to the proof of work algorithm by achieving the same distributed consensus at a lower cost and in a more energy efficient way. (For more details on POS vs POW read here ) So if you are holding any such POS cryptocurre Continue reading >>

Proof Of Stake (pos)

Proof Of Stake (pos)

Proof of Stake (PoS) concept states that a person can mine or validate block transactions according to how many coins he or she holds. This means that the more Bitcoin or altcoin owned by a miner, the more mining power he or she has. The first cryptocurrency to adopt the PoS method was Peercoin . Nxt, Blackcoin, and ShadowCoin soon followed suit. The proof of stake was created as an alternative to the proof of work (PoW), to tackle inherent issues in the latter. When a transaction is initiated, the transaction data is fitted into a block with a maximum capacity of 1 megabyte, and then duplicated across multiple computers or nodes on the network. The nodes are the administrative body of the blockchain and verify the legitimacy of the transactions in each block. To carry out the verification step, the nodes or miners would need to solve a computational puzzle, known as the proof of work problem. The first miner to decrypt each block transaction problem gets rewarded with coin. Once a block of transactions has been verified, it is added to the blockchain, a public transparent ledger. Mining requires a great deal of computing power to run different cryptographic calculations to unlock the computational challenges. The computing power translates into a high amount of electricity and power needed for the proof of work. In 2015, it was estimated that one Bitcoin transaction required the amount of electricity needed to power up 1.57 American households per day. To foot the electricity bill, miners would usually sell their awarded coins for fiat money , which would lead to a downward movement in the price of the cryptocurrency. The proof of stake (PoS) seeks to address this issue by attributing mining power to the proportion of coins held by a miner. This way, instead of utiliz Continue reading >>

Proof Of Stake Faq Ethereum/wiki Wiki Github

Proof Of Stake Faq Ethereum/wiki Wiki Github

See A Proof of Stake Design Philosophy for a more long-form argument. No need to consume large quantities of electricity in order to secure a blockchain (eg. it's estimated that both Bitcoin and Ethereum burn over $1 million worth of electricity and hardware costs per day as part of their consensus mechanism). Because of the lack of high electricity consumption, there is not as much need to issue as many new coins in order to motivate participants to keep participating in the network. It may theoretically even be possible to have negative net issuance, where a portion of transaction fees is "burned" and so the supply goes down over time. Proof of stake opens the door to a wider array of techniques that use game-theoretic mechanism design in order to better discourage centralized cartels from forming and, if they do form, from acting in ways that are harmful to the network (eg. like selfish mining in proof of work). Reduced centralization risks, as economies of scale are much less of an issue. $10 million of coins will get you exactly 10 times higher returns than $1 million of coins, without any additional disproportionate gains because at the higher level you can afford better mass-production equipment. Ability to use economic penalties to make various forms of 51% attacks vastly more expensive to carry out than proof of work - to paraphrase Vlad Zamfir, "it's as though your ASIC farm burned down if you participated in a 51% attack". How does proof of stake fit into traditional Byzantine fault tolerance research? There are several fundamental results from Byzantine fault tolerance research that apply to all consensus algorithms, including traditional consensus algorithms like PBFT but also any proof of stake algorithm and, with the appropriate mathematical modeling, pr Continue reading >>

Proof-of-stake - Wikipedia

Proof-of-stake - Wikipedia

This article may rely excessively on sources too closely associated with the subject, potentially preventing the article from being verifiable and neutral . Please help improve it by replacing them with more appropriate citations to reliable, independent, third-party sources . ( Learn how and when to remove this template message ) Proof-of-stake (PoS) is a type of algorithm by which a cryptocurrency blockchain network aims to achieve distributed consensus . In PoS-based cryptocurrencies the creator of the next block is chosen via various combinations of random selection and wealth or age (i.e. the stake). In contrast, the algorithm of proof-of-work (PoW) based cryptocurrencies (such as bitcoin ) rewards participants who solve complicated cryptographical puzzles in order to validate transactions and create new blocks (i.e. mining ). Proof-of-stake must have a way of defining the next valid block in any blockchain. Selection by account balance would result in (undesirable) centralization, as the single richest member would have a permanent advantage. Instead, several different methods of selection have been devised. Nxt and BlackCoin use randomization to predict the following generator, by using a formula that looks for the lowest hash value in combination with the size of the stake. [1] [2] [3] Since the stakes are public, each node can predict - with reasonable accuracy - which account will next win the right to forge a block. Peercoin 's proof-of-stake system combines randomization with the concept of "coin age," a number derived from the product of the number of coins times the number of days the coins have been held. Coins that have been unspent for at least 30 days begin competing for the next block. Older and larger sets of coins have a greater probability of sign Continue reading >>

Consensus - What's The Difference Between Proof Of Stake And Proof Of Work? - Ethereum Stack Exchange

Consensus - What's The Difference Between Proof Of Stake And Proof Of Work? - Ethereum Stack Exchange

What's the difference between proof of stake and proof of work? The Ethereum frontier network currently uses a proof of work (PoW) consensus algorithm, while a future version of the network plans to utilise a proof of stake (PoS) algorithm instead. What's the difference between these two types of algorithm? This is a sort of test question, since it could fit either on this stack exchange or the bitcoin stack exchange. I'm curious to see whether we consider this on- or off-topic. Jeff Coleman Jan 20 '16 at 21:57 I think it is definitely on topic, the POS transition is a major network feature Tjaden Hess Jan 21 '16 at 2:16 Let us start by what they have in common: they are both algorithms for reaching consensus on the blockchain. Without going into too much details, we need consensus because anyone can create a block; while we only want an unique chain, so we want a way to decide which block we should trust. Proof of work has the nice property that you can use Bayes' Theorem and the laws of Thermodynamics to prove that a given block has indeed required a certain amount of work to be mined. That way, users can simply pick the longest valid chain with the highest amount of work as the correct chain. But this implies that Proof of Work is extremely inefficient in term of energy, and therefore also very expensive; which incentivize miners to centralize the hashing power -- obviously not desirable for a network whose goal is to minimize the need to trust third parties. Proof of Stake isn't about mining, it's about validating. In effect blocks still need to be created by someone, and who gets to create the next block depends on the specific Proof of Stake algorithm, but the selection process must have some kind of randomness, or at least distribute voting shares properly (othe Continue reading >>

Making Sense Of Proof Of Work Vs. Proof Of Stake

Making Sense Of Proof Of Work Vs. Proof Of Stake

Making Sense of Proof of Work vs. Proof of Stake Spend enough time in the crypto-community and youll witness debates over Proof of Work (PoW) and Proof of Stake (PoS). Fans of PoW will argue that its the transaction system Satoshi Nakamoto had in mind for cryptocurrencies. Those in favor of PoS, on the other hand, will argue that mining is outdated, inefficient, and insecure compared to staking. So you might be wondering, whats the difference, is one actually better than the other, and why is it better? Well like most things here at Coin Central, were not here to give you our unsolicited opinions, but we are here to give you some objective information that might help you determine for yourself which proof has best proven its worth. When Satoshi Nakamoto created Bitcoin in 2009, he envisioned a currency that would rely on a trustless and distributed consensus system. This would allow Bitcoin to be decentralized both in technological and financial terms. For instance, when you transact money through a trusted system, a third-party (think banks, credit/debit cards, PayPal) handles these transactions in terms of debit and credit. If Mark sends Sally $100 dollars, the institution will debit Marks account $100 dollars and credit Sally with $100. All of the money is handled by and within the third party, so none of the transacted funds belong to either Mark nor Sally until they are withdrawn from the system. Bitcoin differs from traditional financial hubs by being trustless. This is not to say you cant trust Bitcoin and blockchain with your money. In fact, its quite the opposite. Bitcoins trustless nature allows for a peer-to-peer exchange without the need for a third-party mediator. The traditional mediators are replaced with miners, and these miners work on behalf of Bitcoi Continue reading >>

Ethereum Switches To Proof Of Stake

Ethereum Switches To Proof Of Stake

Recently, we posted a brief overview of the Ethereum ICO craze . Before that, we had reviewed how blockchains work in general. Today, well delve deeper into the process of mining . In this article, well introduce briefly the concepts of Proof of Work (PoW) and Proof of Stake (PoS). Well talk about why Ethereum, the second largest blockchain, is planning to switch the former for the later and share some forecasts as to the outcomes this decision might lead to. Among his many breakthrough accomplishments, Satoshi, the mysterious founder of Bitcoin, is praised for coming up with a solution to whats known as Byzantine Generals Problem. Suppose theres a war. Theres an army that has a city encircled, but due to exhaustion of resources, the armys generals are undecided whether its smarter to attack or to retreat. Suppose, also, that its the 15th century and the commanders, who are all in camps far apart, have no way of communicating effectively save for sending messengers. How could these generals (lets say there are 20 of them) reach a consensus? Obviously, theyll have to vote. If the majority (at least 51%) decides to move forward with a strategy (of attacking, or of retreating), the whole army will have to get behind their choice. Thats only fair and logical. But then theyll face another problem: how to ensure that no general involved in making a decision votes the wrong way on purpose, just to confuse things? Well, in the world of blockchains, the generals are miners. And choosing a war strategy for them is agreeing on a set of rules, a certain view of the history of digital events that are posted on the network. The way that Bitcoin enables reaching a distributed consensus and punishes, or rather discourages, bad actors for acting dishonestly is by using the Proof of Wor Continue reading >>

Why Proof-of-stake Is The Future Of Blockchain Technology

Why Proof-of-stake Is The Future Of Blockchain Technology

Why Proof-of-Stake is the Future of Blockchain Technology Cryptocurrencies are under wide public scrutiny for placing an undue burden on the environment. Concerns that cryptocurrency the primary application of blockchain technology will have broad implications for environmental sustainability are undoubtedly warranted. Bitcoin, for example, is responsible for the estimated annual energy consumption of over 41 terawatt hours, a figure on par with the total energy use of New Zealand . The sustainability problems associated with Bitcoin are predicated upon the Proof-of-Work protocol it employs in order to verify transactions on the network. Proof-of-Work, the methodology used to ensure the validity of the ledgers transactions, demands that complex cryptographic puzzles be solved in order to mint a new block of transactions recorded on the digital ledger. A new block on the chain is minted once a cryptographic puzzle is successfully solved by a miner. This block incorporates the transactions that have been made and propagates them through the network. The miner responsible for minting each block is awarded with a predefined number of coins, as well as the fees associated with the transactions in the block. In a race to mint the next block and reap mining incentives, miners expend a great deal of energy in order to stay competitive. Successful mining justifies the costs associated with mining operations because miners are able to exchange their coins for fiat currency. In countries like China and Mongolia, where electricity costs are amongst the lowest in the world, full-scale mining operations are powered primarily by coal. The use of cheap energy sources is a driving contributor to climate change and environmental degradation. Furthermore, the fact that Bitcoin miners rel Continue reading >>

Code Your Own Proof Of Stake Blockchain Ingo!

Code Your Own Proof Of Stake Blockchain Ingo!

Code your own Proof of Stake blockchain inGo! Questions about the following tutorial? Why wait? Join us in our Telegram chat! In our last post , we talked about what Proof of Work was and showed you how to code your own Proof of Work blockchain. The 2 most popular cryptocurrencies, Bitcoin and Ethereum are both based on Proof of Work. But what are the downsides of Proof of Work? One of the major ones is electricity consumption. There is a race to set up bigger and bigger mining rigs to get the hardware power needed to mine more bitcoin. Check out the madness for yourself in this photo of a mining setup: This costs an insane amount of electricity. Bitcoin mining alone consumes more energy than 159 countries! This is pretty irresponsible. However, from a technological perspective there are other downsides to Proof of Work. As more and more people participate in mining, the difficulty of the consensus algorithm needs to go up, creating a need for more hashing power. This means blocks and transactions take longer to get processed and get more expensive to mine. Proof of Work is a race to the bottom. There are many thought leaders trying to find alternatives to Proof of Work. The most promising one so far is Proof of Stake. There are already production-ready blockchains based on Proof of Stake like Nxt and Neo . Ethereum is probably moving to Proof of Stake their Casper project is already live on their test net. Instead of nodes competing with each other to solve hashes, in Proof of Stake, blocks are minted or forged (there is no mining so we dont use that word in Proof of Stake) based on the amount of tokens each node is willing to put up as collateral. These nodes are called validators. We will be using the terms nodes and validators interchangeably in this tutorial. The Continue reading >>

Ouroboros Proof Of Stake Algorithm

Ouroboros Proof Of Stake Algorithm

Ouroboros Proof of Stake Algorithm is the most important part of the protocol. It defines theway nodes reach consensus about the state of ledger. Ouroboros is unique as it is the first blockchain protocol based on proof ofstake that is scientifically proved to be secure. The most important thing about picking proof of stake algorithm over proof ofwork the one adopted by Bitcoin is the energy consumption considerations.Running the Bitcoin protocol is a tremendously expensive endeavor. It isestimated that 3.8 American households can be powered for a day by the energyspent to generate one Bitcoin transaction. These energy requirements for runningthe Bitcoin protocol only grow as more and more Bitcoin miners sink money intomining, and the difficulty of the problems that their computers (mining rigs)are cracking increases. This is why researchers did their best to investigatealternative ways to reach consensus such as using the so-called BFT (ByzantineFault Tolerant) consensus algorithms and proof of stake algorithms. In this section we explain what proof and stake mean, and then put it alltogether, explaining what proof of stake means. The proof part of proof of stake is about having evidence that blocks oftransactions are legitimate. Stake means the relative value held by addresses on the node. By relativevalue we mean all value held by wallets on a particular node divided by totalvalue in the system. Please read Balance and Stake in Cardano SL for more information. Rather than saying that miners are pouring money into mining rigs running theprotocol, in order to participate in running the protocol in proof of stakeenvironment, we say that slot leaders generate blocks for the blockchain. Anyonecan become a slot leader if the coin selection algorithm would select a cointhe Continue reading >>

Understanding Blockchain Fundamentals, Part 2: Proof Of Work & Proof Ofstake

Understanding Blockchain Fundamentals, Part 2: Proof Of Work & Proof Ofstake

ECE Major. Blockchain, infosec, IoT, autonomous vehicles. ex{@Honda}, Research/Writing {@LoomNetwork} Understanding Blockchain Fundamentals, Part 2: Proof of Work & Proof ofStake In part one , we discussed the Byzantine Generals Problem, how to achieve Byzantine Fault Tolerance, and how this all relates to blockchain. The algorithm in the previous article is in fact a solution which achieves Byzantine Fault Tolerance. However, that solution is not efficient enough, and its variations have constraints, namely that less than a third of the network is dishonest. Running time of solving the Byzantine Generals Problem with the algorithm proposed by Lamport, Shostak and Pease (n = number of actors, m = number of traitors) That leads us to a classic question in Computer Science: The topic of the present article will discuss alternative algorithms which achieve Byzantine Fault Tolerance. Note: Please bear with any simplifications that I make. These algorithms have a lot of complex research behind them. I will be providing links as we proceed for the interested reader to do their own further research. Blockchains use consensus algorithms to elect a leader who will decide the contents of the nextblock. That leader is also responsible for broadcasting the block to the network, so that the other peers can verify the validity of its contents. This is the most popular algorithm being used by currencies such as Bitcoin and Ethereum, each one with its own differences. Before continuing, for the non-technical readers: A hash function is any function that can be used to map data of arbitrary size to data of fixed size . If a hash function is secure, its output is indistinguishable from random. keccak256("hello") = 1c8aff950685c2ed4bc3174f3472287b56d9517b9c948127319a09a7a36deac8 keccak25 Continue reading >>

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