Proof Of Work Era Over?
Why We Use Proof Of Stake
If you happened to wade through dozens of the ICO projects looking for the one to watch, you might have been baffled by the “Proof of …” diversity. There’s been a fair number of breakdown articles explaining the nuts and bolts of consensus algorithms, and we don’t strive to overrun them. The aim of this overview is to answer the frequent “How do I mine in your system?” and capture the latest trends in the universe of ICO supernovas.
Proof of Work is the oldest and most commonplace. Implemented by Satoshi, this trustless consensus rewards the fastest in solving the cryptographic puzzle. It laid the foundation for Bitcoin, Ethereum, Litecoin and Dogecoin. The underbelly is that perplexing computational tasks call for powerful computing systems. In 2017, Bitcoin shook the world with 11-fold surge. And also with the formidable stats that of Bitcoin and Ethereum consuming more electricity than 159 world countries together. Talking of PoW, taking over 50% of the computing power is enough to hack the system. In Bitcoin it would be more than $5 billion, but most PoW systems are much smaller, like the ever emerging mining pools with the 100X ROI promises which can be found in abundance in Bitcointalk announcements.
In Proof of Stake, the weight of your input determines the voting power. PoS is a wealth-defined algorithm since the biggest stakes empower you to make changes and entitle to mine a part equivalent to your stake. Since there’s no block reward, miners (also called forgers) take a transaction fee.
PoS was first applied by Peercoin in 2012. It originated from the idea of virtualizing mining and restricting the monopoly. That’s the Ethereum’s problem with ASIC miners which can be ditched with the PoS algorithm.
PoS is not exempt of vulnerabilities, the main one being “nothing-at-stake” problem: validators are not anchored by anything like in PoW and thus may vote for multiple options. Owning 51 and more per cent of currency in the system may also undermine the trustlessness along with a possibility of bribe attacks which cost much lower than in PoW.
The biggest advantage of PoS seems to be that validators have a vested interest in the stability and growth of the system, which renders sabotaging with 51% at hand pretty useless.
In Proof of Work, miners don’t own any blocks and thus are likely to seek the ways of maximizing the profit hardly caring about the wellness of the system as an integrity. At the same time, validating a fraudulent transaction in a Proof of Stake system may result in losing all your holdings you’ve put at stake.
We are not saying PoS is better than PoW. We simply find it more efficient, both as a consensus mechanism and in terms of energy consumption. It also suits Market.space’s architecture and mission perfectly. So yes, you can earn as a Miner in Market.space system, and you don’t need a superpoweful GPU/CPU for that. Miners act more like validators in Market.space system. It’s Miners who match the CRC for the transactions (one from Sender and one from Host) in our PoS system to verify them and forge the new blocks. The customers will be able to offer a small fee to encourage the quicker validation.
Recently, a good deal of alternate protocols have emerged: from Delegated Proof of Stake to more sophisticated Proof of Individuality, Proof of Activity, Proof of Capacity, Proof of Burn, Proof of Authority, Proof of Elapsed Time and others. While Proof of Work looks as a venerable throwback kept afloat by giants like Bitcoin, those seem to be too specific and limited in use. Will any of them override PoS and PoW? We’ll see a few years down the line.
Have another opinion or thoughts to share? We’d love to hear your take on it! Join the discussion here or find us in other social networks:
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