Cryptocurrency 101: Understand the two main mechanisms of the consensus
The world of cryptocurrency is a complex and rapidly growing space that occurs regularly emerging mechanisms of new technology and consensus. The essence of cryptocurrency is based on a decentralized network that enables consumers to control their transactions and assets without intermediaries such as banks or government.
In this article we immerse yourself in two of the most frequently used consent mechanisms cryptocurrencies: proof of work (Pow) and stack (PO). These mechanisms are very important for the operation of various cryptocurrencies and have a major impact on their safety, scaling and reception.
Proof of work (pow)
Pow is the most frequently used mechanism of consensus cryptocurrency. He was introduced for the first time in 2008 with Bitcoin. With a hard fork and has been accepted by many other cryptocurrencies since then, including Ethereum, Monero and Litecoin.
Pow, a network of mines, competes with the solution of complex mathematical puzzles to confirm blockchain operations. These puzzles are difficult to solve with the current performance of the computer, hence the term “work program”. After solving the puzzle, the first miner can add a new operating unit to blockchain and receives a newly shaped cryptocurrency.
This is how it works:
- Collect mountains and check blockchain operations.
- Miner selects a group of operations that are contained in a new block (“Block Award”).
- Miner calculates mathematical puzzles for each group of selected group.
- The first miner to solve the puzzle known as “work” receives a newly shaped cryptocurrency and the right to add a further operating block.
Pow advantages:
- Energy efficiency : Pow requires a high calculation performance that reduces energy consumption.
- Safety : The use of complex mathematical puzzles for malicious actors makes it difficult to manipulate the network.
- scaling : Pow can process a large operating volume per second.
Pow disadvantages:
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- Centralized control : Mining pools, which are often dominated by large companies or countries, can cause centralization in the network.
pile (pos) proof
POS was popular as an energy -saving alternative to Pow. He was first presented with Ethereum in 2016. Hard fork and has been accepted by many other cryptocurrencies since then.
POS, Validierers are selected to create new blocks, taking into account their cryptocurrency goods in their wallets. Valid with a higher cryptocurrency (i.e. those who have more) have a greater opportunity to choose to participate in the approval process.
This is how it works:
- Consumers bring their cryptocurrency into a wallet or an exchange.
- Create a Random Choice Fund that selects consumers according to their balance.
- The top user of the pool is selected as a validator.
POS advantages:
- Energy efficiency : POS requires significantly less energy than Pow, which makes it more environmentally friendly.
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- Reduced operating fees
: With increasing number of inspectors and taxes in connection with the approval of the operations.
POS disadvantages:
- Centralization : The use of a random selection fund can cause centralization on the net if it is dominated by a small group of users.
- slower blocks of the times : POS can be slower than the Pow, since the approval process takes longer due to the need for several experiences.
