One Consensus Algorithm to Rule Them All
Proof of Stake vs. Proof of Work — Rules but no Rulers
Hey! You! Yes, you! Want to know a little secret? What if there were a wave washing over the land changing the underpinnings of all the systems we have come to know and rely on? What if this wave shifted power from the hands of few to the hands of many? What if all this wetness wasn’t just a little wave but an imminent, unstoppable, tidal like force, as promised as the irreversible melt of the Antarctic Ice Shelf? What if I wrote this whole article as a series of what-if scenarios? Would it be an effective way to get a seriously important point across to you? Or would it just make you quickly press that home button and scurry over to the ‘gram, getting that little piece of satisfaction that you can only get from watching cats getting frightened by cucumbers?
No more “what-ifs”. On to the “what it is.” What it is, is cryptocurrency, and its taking the world like a tidal wave. A very important aspect of cryptocurrency is the consensus algorithm. This is the mechanism that makes cryptocurrency what it is, a digital new-age currency. The platform for decentralization. What does a consensus algorithm do? Well, it allows for decisions to be made without the influence or approval of any single person or small group. Its a set of rules that, once evaluated, determine a decision, never swayed by whim or weather. In the case of blockchain, consensus algorithms verify the transactions that make up a block, that is the recent transactions that have not yet been confirmed by the network. Under a consensus algorithm called Proof of Work, this block of transactions float around in internet purgatory until all the nodes in the network(the miners) do a bunch of nonsensical math equations to find a secret key that will validate the authenticity of the block and submit it to the chain for permanent storage. This process can be very wasteful, eating up tons of electricity. It’s said that the electricity used by miners on the Ethereum network is more than that of a small country. Not a sustainable way of going about things, to be quite honest.
For this reason, and a few others, the people in charge of Ethereum have decided to soon update the Ethereum blockchain with the Casper Protocol, which will switch the network over to a consensus algorithm utilizing the Proof of Stake methodology.
Proof of Stake is a methodology where a miner will stake out a portion of their cryptocurrency to show that they are invested in the well-being of the network, and to be eligible to mine for more cryptocurrency utilizing this mechanism. Unfortunately, no one has a ton of cryptocurrency except for the whales in the network. These whales can be rewarded with gifts, which they don’t want or need. With Proof of Stake, the users with the most money are the people who have the ability to mine for new money. This is said to be a safe thing for the network, as a person who is more invested in cryptocurrency is also more invested in the proliferation and protection of its blockchain, so they are given more trust on the network.
While there are the drawbacks that the playing field for those who are wanting to mine for new cryptocurrency is not as strong, Proof of Stake brings a level of efficiency to the consensus aspect of blockchain that is a necessary response to the current waste in the network.
…back to that wave. That wave is decentralization. That wave is changing up power structures. That wave is causing a select few a lot of grief and discomfort. That wave is changing the overseer of the game. Consensus algorithms make those in power uncomfortable, as the decisions they once presided over will not be theirs to make. This renders their positions useless, leaving space for new societies and governance.
