The blockchain industry has voted with its own feet, and Bitcoin-style mining of cryptocurrencies has been relegated to the scrap heap of history, at least for new chains.
Bitcoin, the first and largest blockchain, uses mining, also known as Proof of Work (PoW), as a consensus mechanism. This means how the blockchain is secured, new information is added, and new bitcoins are distributed. Other major blockchains that use similar mechanisms include Bitcoin Cash, Litecoin, memecoin Dogecoin, and privacy coin Monero.
Mining has received a lot of bad press over the past few years, and there’s a reason for that. For one, it uses an enormous amount of power.
For another reason, it doesn’t scale very well. With new information only added every 10 minutes, Bitcoin tops out at 4-5 transactions per second (TPS). Not enough for modern payment systems that want to compete with Visa’s current maximum of 65,000 TPS.
This marks the start of the second blockchain, Ethereum, to begin the switch from PoW to the much greener proof-of-stake (PoS) Ethereum 2.0, as the culmination of a years-long development process. That’s why.
Nonetheless, many still consider PoW to be the best solution, especially for payment cryptocurrencies that are primarily used as payment currencies, as it is more secure and decentralized than PoS and layer 2 like the Lightning Network. Blockchain can be used to increase speed.
This is the case with PoW.
The PoW discussion begins with blockchain security built into the consensus mechanism.
It’s basically a race to solve math puzzles, and the more computational power you have, the more likely you are to win first. Bitcoin at $20,000 is down about 70% from all-time highs, which means he will be given $125,000 every 10 minutes.As a result, computing power is poured into that race, and it uses about as much power as used every year by Pakistan.
Unlike mining, Proof of Stake uses validators that bond for inherently good behavior, but truncate for poor work or fraudulent behavior. Validators are chosen randomly, but are chosen to match the size of your stake. Therefore, the more cryptocurrencies you can afford to lock as stake, the more profit you can make.
The argument that PoW is more secure starts with the cost of a malicious person taking control of the blockchain and launching a 51% attack that allows double spending of tokens. To attack a well-established PoW blockchain, you need to acquire her 51% of all computing power. PoS blockchain requires his 51% of the stake.
In both cases, security depends on the maturity of the blockchain and the number of people mining or staking it. But the argument persists that mining requires something outside the blockchain itself, an external source that cannot be hacked. Proof-of-stake validation has a much lower barrier to entry, but the major blockchains make funding attacks impractically high.
Moreover, bitcoin proponents point out that much of the energy bitcoin miners currently use is renewable.
Then comes the simplest argument. His PoW security for Bitcoin has stood the test of time. Proof of stake, especially at scale, is much newer.
It is too easy for validators to build larger empires, especially on smaller chains. Especially since PoS staking generally requires other investors to lend their tokens to validators to increase their own amount of stake and control.
The flip side of this argument, however, is that the cost of Bitcoin mining equipment and the power it requires is so high that only a few major mining companies control most of it.
There are also offshoots of PoS like delegated Proof of Stake with a limited number of validators. The problem with that system is that the Cropchain Bridge protocol was hacked for $625 million when a hacker compromised the passwords of five of his nine validators, hacking his Ronin Network. became clear in
“This hack reflects the ongoing challenges facing blockchain and operators in balancing user experience and security,” said Huobi Research Institute head of the Huobi cryptocurrency exchange. Flora Li said in March.
As its popularity skyrocketed, operators “took shortcuts to alleviate network bottlenecks, reducing the number of nodes that required transaction validation to five out of nine, making them easier for hackers to exploit.” I made it.”
Increasing the number from 5 to 8, as the Ronin operator did, “remains the root of how a proof-of-stake blockchain keeps transactions fast, easy to use, and energy efficient, without compromising security.” problems will not be resolved.”
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