Why “Proof of Stake” (PoS) Blockchains Matter
When it Comes to NFTs and Crypto Platforms, Brands Have Options
Time to dispel the biggest myth with NFTs: Not all blockchains are created equal, and not all NFTs all terrible for the environment.
Whether we’re talking about cryptocurrency purchases or NFT minting, blockchains are decentralized means they are not under the control of financial institutions. Different blockchains are built using different codes, but all transactions that take place across the entire Web3 ecosystem require a process for verification. The two most common methods for validation are “proof of work” (PoW) and “proof of stake (PoS).”
Proof of Stake or Proof of Work?
The biggest difference between proof of stake and proof of work is their energy usage. Proof of work requires “miners,” or individual, decentralized validators, to compete to solve complex mathematical problems. The first miner to solve the problem gets to add a block of transactions and earn rewards. This results in mining devices around the world computing the same problems and using substantial energy.
Since proof of stake doesn’t require validators to all solve complex equations, it’s a much more eco-friendly way to verify transactions.
The differences are significant from an environmental perspective. Proof of work was the first consensus mechanism developed for cryptocurrencies, but is far less efficient. It requires more labor and computing power. For anyone who has traded on ethereum, this is why “gas prices” are high and transactions often take longer periods of time.
With proof of stake as a consensus confirmation, owners of the cryptocurrency can stake their coins, which gives them the right to check new blocks of transactions and add them to the blockchain. Since proof of stake is much more energy-efficient, it has gotten more popular as attention has turned to how crypto mining affects the planet.
Proof of Stake: How it Works
The proof-of-stake model allows owners of a cryptocurrency create their own “validator nodes.” Staking is when you pledge coins to be used for verifying transactions. They are locked up while you stake them, but you can un-stake them if you want to trade them.
When a block of transactions is ready to be processed, the proof-of-stake protocol will choose a validator node to review the block. The validator checks if the transactions in the block are accurate. If so, they add the block to the blockchain and receive crypto rewards for their contribution. However, if a validator proposes adding a block with inaccurate information, they lose some of their staked holdings as a penalty.
Dapper’s Flow: All the Proof You Need
Just last week, Dapper — creator of the Flow Blockchain, NBA TopShot and NFL AllDay — shared a report from Deloitte Canada that demonstrates how energy consumption works. Flow uses just 0.18 GWh annually, based on 2021 usage — or in simpler terms, minting an NFT on Flow takes less energy than a Google search or Instagram post.
In contrast to other Web3 platforms, the 0.18 GWh is astoundingly low. Solana registers an 11.05, while Ethereum comes in at 108.4.
The primary drivers of the energy usage are collection and consensus nodes. Flow’s unique multi-role node architecture divides the processing between specialized node types (securely), making the network more efficient than other blockchain architectures.
Reduced Mining Power = More Efficient
Mining power in proof of stake depends on the amount of coins a validator is staking. Participants who stake more coins are more likely to be chosen to add new blocks. Each proof-of-stake protocol works differently in how it chooses validators. There’s usually an element of randomization involved, and the selection process can also depend on other factors such as how long validators have been staking their coins.
That’s why most participants join staking pools. The staking pool’s owner sets up the validator node, and a group of people pool their coins together for a better chance of winning new blocks.
The fact that proof of stake is environmentally friendly means it will likely continue to grow more popular as a consensus mechanism.
To mint your assets with Mint on eco-friendly blockchains, learn more here.