The term Mining is replaced with Validation, and a Miner is replaced with a Validator. The proof of stake (PoS) consensus mechanism brought some changes to the protocol. See: What is Proof-Of-Work & Proof-Of-Stake.The most popular one among these is Proof of Stake (PoS). This is known as a 51% attack.ĭue to these disadvantages, other consensus mechanisms are developed through these years. They ultimately can control the whole network and can exploit it. Suppose miners collude with each other and control 51% of the computing power.Mining uses a considerable amount of electricity, and thus it is not eco-friendly.Mining is a resource incentive as it needs a computer for the consensus mechanism. However, the process has some limitations: The system developed by Satoshi Nakamoto was decentralized, unique, and secure. Further, this process needs highly efficient computer nodes to solve this equation. This process is known as mining as it leads to mining new Bitcoins (BTC) on the network. The miner who solves this problem will first record the transaction on the ledger and be rewarded in Bitcoin. Whenever there is a transaction on the network, some miners will be chosen randomly to solve an equation. Proof of Work is the protocol through which a transaction gets recorded on the ledger (or blockchain). Therefore, this technology came to be known as Distributed Ledger Technology or Blockchain. So, Bitcoin created a unique method of recording these transactions.īitcoin created a ledger distributed worldwide, which is kept with several computer nodes known as Miners. Because the system was decentralized, there was no central authority such as a bank to record the transactions in a ledger. Conclusion: Staking Guide for Beginnersīitcoin introduced us to a decentralized system of doing and recording transactions.Things to check before staking your funds.Validator as service (Third-party validator service)
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