Ethereum, the primary blockchain backing Ether, is declaring a grand update, aiming to decrease the enormous energy consumed in Ether mining by 99.95 percent.
In addition, the company announced a move to Proof-of-Stake (PoS) mechanism away from the existing Proof-of-work (PoW).
For the uninformed, Blockchain is a virtual circulated database that records every transaction, making every deal transparent and firm, indicating that it cannot be altered or adjusted. And there are multiple types of Blockchains available depending on usage.
The two primary blockchains used for the transactions are Bitcoin and Ethereum. Bitcoin Blockchain is quick, secure, and robust but is extremely expensive. On the flip side, Ether is budget-friendly but is slower than Bitcoin. However, one thing is common – both blockchains consume a lot of energy.
What is PoS? How is it better than PoW?
Both PoS and PoW are modes of mining cryptocurrencies. A chain of private computers – a network – is constantly working to authenticate transactions by solving complex cryptographic puzzles. It is known as cryptocurrency mining.
Most legacy cryptocurrencies, such as Bitcoin, depend on a proof-of-work mechanism. PoW mechanism is a traditional form of crypto mining where thousands of computers are required in a mining facility, consuming high electric power.
However, in PoS, anyone who owns any amount of cryptocurrency can put up their tokens as collateral for blockchain development.
In return, the user gets rewarded a fixed percentage of the pledged assets when a new block is added to the blockchain. This process is known as the “staking” of crypto assets. Miners get additional ownership of the token over time via network fees, newly minted tokens, or other reward mechanisms for every new block created.
In the beginning, proof-of-work was an attractive concept because people just needed an ordinary computer to mine coins. However, PoS is better than PoW because you do not need mining equipment to reduce energy consumption by 99.95 percent and increase transaction speeds.
Furthermore, in a tweet earlier, some users and well-known names in the market, such as Jack Dorsey, pointed out that this new method does not offer as much security to the network as proof of work offers.Share & like