cryptocurrency 101: understanding of the two main consent mechanisms
The world of cryptocurrencies is complex and quickly in development, new technologies and consent mechanisms are regularly. The essence of the cryptocurrency is based on a decentralized network that allows users to control their transactions and tools without the need for banks or governments.
In this article, we enter two most used consent mechanisms in cryptocurrency: justify the work (POW) and to demonstrate participation (Pos). These mechanisms are crucial for the functioning of the various cryptocurrencies and have significant consequences for their safety, scalability and acceptance.
Work certificate (POW)
Pow is the most commonly used consent mechanism in cryptocurrency. It was introduced for the first time with the 2008 villa Hard in Bitcoin, and since then it has been accepted by many other cryptocurrencies, including Ethereum, Monero and Litecoin.
In Pow, the mining network competes for solving complex mathematical puzzles to validate blockchain transactions. These puzzles are designed to have difficulty solving the performance of current computers, so it is «proof of work». The first miner to resolve the puzzle adds a new block of blockchain transaction and rewards it with the encrypted cryptocurrency.
It works like this:
- Miningists collect and control transactions on the blockchain.
- The miner chooses a group of transactions that must be inserted in a new block («Block reward»).
- The miner calculates the mathematical puzzles of all transactions of the selected group.
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advantages of power:
- Energy efficiency
: POW requires significant computational performance, which reduces energy consumption.
- Security : The use of complex mathematical puzzles makes it difficult for harmful actors manipulating the network.
- Scalability : Pow can manage a large amount of transaction to the second.
Disadvantages of Pow:
- Energy consumption : The energy necessary for cryptocurrency mining is significant, contributing to greenhouse gas emissions and environmental concerns.
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Palo Certificate (POS)
POS has gained popularity as a more efficient alternative from the energy point of view to POW. It was introduced for the first time with the 2016 Hard Villa Ethereum and has since been accepted by many other cryptocurrencies.
In POS, validators are chosen by creating new blocks based on the balance of the wallet cryptocurrency. Validators who have a greater cryptocurrency (i.e. those who own the most) have more chances to choose to participate in the validation process.
It works like this:
- Users put their cryptocurrency in a wallet or exchange.
- Create a random selection set that selects users according to their balance.
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The advantages of Pos:
- Energy efficiency : POS significantly requires less energy than the power, making it more respectful of the environment.
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- Reduced transaction commissions : as the number of validators increases the number of transactions.
Disadvantages of Pos:
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- Più slow block times : POS can be slower than Pow, since the validation process lasts longer as it has more validation needs.