PoW, PoS, LPOS: differences in kinds of mining
Cryptocurrencies become more and more popular in a modern world. More and more places where you can buy something using this type of money appear on a world map. That’s why modern people are often interested in the ways to get cryptocurrency.
Mining is one of the most popular words which are associated with cryptocurrency. It represents one of the ways to get cryptocurrency. Let’s consider the definition of mining and its kinds.
What is mining? The definition of Proof of Work
In simple words, mining represents an expensive computer calculation for the creation of a new group of trustless transactions. Such transactions are integrated into the block, and blocks are integrated into blockchain — a distributed ledger.
There are 2 purposes of mining:
- Verifying the legitimacy of transactions
- Creation of new cryptocurrencies by rewarding people
People who perform such difficult calculations are called miners. In order to verify the legitimacy of transactions, you need to follow the rules of protocol for a concrete cryptocurrency. One if such protocols is Proof of Work.
During the process of Proof of Work miners compete to solve a certain puzzle. Successful person presents his solution to the network of cryptocurrency. If 51% members of the system agree, miner gets a reward.
Such method of validating transactions needs the usage of a specialized hardware that becomes more and more expensive. In addition, using Proof of Work is connected with the risk of a 51% attack. The members of blockchain might conspire to add a fake solution on a whiteboard. As a result, conspiratory mining pool gets an access to 51% of the network. Such power allows to control the whole blockchain and approval of new blocks.
Disadvantages of Proof of Work lead to the fact that people started to think about the creation of another method to verify transactions. Let’s consider such method as Proof of Stake.
New approach to the mining in Proof of Stake
Algorithm Proof of Stake let validate transactions in another way. In this system, the members of blockchain are nodes and some of them are also validators. The validator with the most coins at stake solves their puzzle. This operation verifies his stake, and the validator receives transaction fees for adding a new block to the chain.
In comparison with PoW, PoS is energy efficient. You don’t have to use much computational power. That’s why it’s also cheaper. And this model reduces the risk of a 51% attack because you need to get lots of coins for this goal here.
But PoS didn’t get rid of all the problems. There is “nothing-at-stake” problem when a validator has a chance to get a stake in the network if he only appears in the system. A person might validate on multiple blockchains or just get his stake from the bank.
LPoS: improved PoS
Some blockchains use an improved version of PoS. Such model is called Leased Proof of Stake. For example, it is used by EDC Blockchain.
EDC Blockchain (https://blockchain.mn/home/) represents a global platform that exists on the market since 2015. According to the LPoS algorithm, all cryptocurrency holders are integrated into so-called masternodes.
Masternode represents a fund which gathers donates from users. The procedure of giving donates to the masternode is called leasing. Such system of EDC Blockchain stimulates users to take part in working on ensuring network security. And leasing can give users profit.
You can lease your coins from your wallet to the masternode for 3, 6 or 12 months. Masternode starts mining. Then people are rewarded in proportion with their contribution. You will be able to withdraw your money instantly at any moment. According to a chosen period, you can take a certain profit. You can know more and take part in leasing here: https://blockchain.mn/leasing/
Links to the pages of EDC Blockchain:
Website: https://blockchain.mn/
Telegram: https://t.me/EDCBlockchain
Twitter: https://twitter.com/EDCBlockchain
Facebook: https://www.facebook.com/EDCBlockchain/
Instagram: https://www.instagram.com/EDC.Blockchain/
Youtube: https://www.youtube.com/channel/UCdkt4HSObcdnSU4CrqZqgig
Reddit: https://www.reddit.com/user/EDC-Blockchain/
The author of this article on BitcoinTalk: thlayli (https://bitcointalk.org/index.php?action=profile;u=2637842)
