To Stake, or Not To Stake ECC?
from the ECC Team
That is the Question!
Varieties of awesome features make blockchain technology and cryptocurrency the single most awesome technological creation in recent times, but the innovative technology that backs the success of blockchain technology and cryptocurrencies is its consensus algorithm. The aim of consensus algorithms in a blockchain network is to create an environment where multiple nodes or agents can come to an agreement on the value of any data passed through that system. Let’s take Bitcoin (BTC) as an example.
For a transaction to be verified on the Bitcoin blockchain network the transaction must be presented on a single block, and before the transaction is validated an agreement must be reached by various nodes on the network by a consensus mechanism called Proof of Work.
The downside to Bitcoin’s consensus algorithm is the high amount of energy required to confirm just one transaction on the network. That is more reason why newer blockchain projects such as ECC have moved away from the Proof of Work consensus algorithm to newer consensus algorithms like Proof of Authority, Proof of Access, Proof of Weight, Proof of Burn, and even Proof of Capacity. But the alternative that has met any reasonable success is the Proof of Stake consensus algorithm, also commonly abbreviated and referred to as PoS.
Before we go into detail about how Proof of Stake works within ECC, let’s first talk a little about the basics of staking cryptocurrencies and the origin of this particular consensus algorithm.
What is staking?
Cryptocurrencies offer one of the best and fastest investment opportunities in recent times. But one of the best and certainly easiest ways to make money in the cryptocurrency world is through staking. Staking simply means holding a certain amount of cryptocurrency in your digital wallet for a fixed period and then getting a reward for honoring your contract, per se.
The reward gotten from staking cryptocurrencies increases with the length of time you hold the cryptocurrency, and the amount of cryptocurrency you possess in your wallet.
You can only stake with PoS altcoins, as Bitcoin employs a different reward mechanism called Proof of Work where you have to mine a certain amount of BTC to qualify for a reward. But staking has it advantages; it eliminates the need to buy expensive mining equipment and you only have to possess a certain amount of coins and hold them for a specific period of time to qualify for a reward.
Proof of Stake Origin
The Proof of Stake consensus algorithm was developed by Sunny King and Scott Nadal in 2012 as an alternative to the Proof of Work consensus algorithm. The Proof Of Stake consensus mechanism states that a miner can verify transactions based on how many coins they hold.
This simply means the more coins you possess, the greater your mining power. Proof of Stake consensus mechanism solves the energy consumption issue that comes with the Proof of Work, by eliminating any computational task and just attributing hash power to the amount of coins held by the miner.
That means if a miner possesses 2% of the total coins available, then that miner can mine 2% of the blocks in the blockchain network.
ECC is a fairly new blockchain project to most (even though it has been around since 2014) that operates a Proof of Stake consensus algorithm. The staking process on the ECC multi-chain is a bit unique, so before we go into the staking process of ECC let’s layout what ECC is all about.
What is ECC?
ECC is a futuristic blockchain project that utilizes a multi-chain network to achieve network scalability and consensus. It’s also open-source and offers its own API where decentralized applications can be developed.
The most important selling points of the ECC blockchain are the innovatively secure and decentralized network services it offers:
Address Name Services (ANS)
Every blockchain project has its own cryptocurrency, and cryptocurrencies have their own wallet addresses for every user of that particular crypto. These wallet address are called public keys and they are mostly in this format "02adx34baDVU39zxd3dghj0008gsdvbnsA067zert098". This public key ensures coins are sent to the parties within an encrypted transaction.
The stressful part about using a public key is having to type or copy/paste such phrases into the computer due to not being able to easily memorize them or running the risk of error and sending the coins into crypto oblivion. That’s why ECC has introduced an Address Name Service (ANS) where users can choose their preferred username, and it is mapped directly to their public key.
Decentralized File Storage
ECC wants to tap into the 3 trillion dollar file storage industry employing an innovative decentralized storage service. ECC will split files into encrypted pieces and split them across different host servers on the blockchain network, to make sure they are always safe and easily accessible.
Any user can become a host by offering storage space on their computer, and they get paid in return.
Another trendy product of the ECC blockchain platform is a completely private messaging service. Fully encrypted, even more encrypted than telegram because it is decentralized while all your messages on telegram, no matter how encrypted is stored on their server, and centralized servers can be compromised.
ECC tackles this privacy issue by developing a decentralized, encrypted messaging service that will later be applied to emails.
The ECC staking process
All 25 billion coins have already been mined and are currently in circulation (yes, that means no inflation), so the only rewards still available to be earned through staking are the coins that are burned as fees.
Since all 25 billion coins must remain in circulation, as fees are charged for ECC services (either through ANS, Messaging, or File Storage) or for sending coins to other users, these fees are "burned" and then re-distributed to stakers through the process of staking keeping the circulating supply constant at 25 billion. Staking is required by the network to generate new blocks, otherwise the chain does not move.
When you stake you have a chance at generating the next block, and if you do, you earn a certain amount of coins that were recently burned as fees in previous blocks as long as the total supply is less than 25 billion. Staking rewards are calculated as a function of both coin maturity and the number of coins in your wallet. When it comes to staking rewards a huge positive of ECC is that only 1 coin is required to stake, however coin maturity maxes out at 84 days.
I hope this article serves its purpose as a great source of information for you on the Proof of Stake consensus algorithm, how staking works and the advantages of staking ECC.
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