Deep dive: Proof of Work v/s Proof of Stake v/s Proof of HistoryIf you find the analysis useful, please like and share our ideas with the community. Any feedback and suggestions would help in further improving the analysis!
Today, we thought we would explore the different consensus mechanisms that form the backbone of the underlying Blockchain technology.
We have attempted to briefly cover the following:
Proof of Work
Proof of Stake
Proof of History
These are consensus mechanisms that validate the transactions on the Blockchain. Each of these mechanisms work differently. These differences result in different transaction speed, fees and efficiency.
In order to discuss these 3 mechanisms, we have used three different cryptocurrencies corresponding to the mechanism they follow.
Bitcoin → Proof of Work
Cardano → Proof of Stake
Solana → Proof of History
Proof of work:
Transactions need to be verified on the network and this verification is done via solving complex mathematical problems, called cryptography. The digital currencies therefore came to be known as ‘Cryptocurrencies.’ It was described in the original whitepaper by Satoshi Nakamoto,
Verifiers, also known as miners are rewarded for participating and validating the network transactions. This was considered a game-changer when it emerged in the original whitepaper by the pseudonymous Satoshi Nakamoto. The idea existed earlier than the publication in the white paper and was known as the Nakamoto consensus.
According to Satoshi Nakomoto, “the longest chain not only serves as proof of the sequence of events witnessed, but proof that it came from the largest pool of CPU power.”
However, there are several drawbacks to this mechanism. It uses huge amounts of electricity, and emits significantly large amounts of carbon into the environment. Another major drawback is that transactions are slow and inefficient on a large scale. It limits the scalability of the Proof of Work mechanism to mainstream finance.
Proof of Stake:
It came into existence in 2012 after its founders pointed out the inefficiencies of the Proof of work mechanism.
In blockchains that use proof-of-stake, nodes in the network engage in validating blocks, rather than allocating their computing resources to “mine” them. Within these networks, security and consensus is achieved by participants committing a stake — their private or collective capital — to the enterprise in the form of the network’s native tokens.
Ether (ETH) has been indicating to move away from the energy draining proof-of-work mechanism to the energy efficient proof-of-stake for quite some time.
Proof of history:
Proof of History is a sequence of computation that can provide a way to cryptographically verify passage of time between two events.
As per official newsletter of Solana Labs, “the Proof of History solution was presented by the Solana project in order to finally eliminate an issue of the validity of timestamps in distributed networks. Unlike using the established method with timestamps, one can make certain that the action is performed at a distinct point in time after one action, but before another. Through Proof of History, we can ensure that a certain action took place at a certain point in time, before or after another action. This is made possible without the use of timestamps or external synchronizing structures. Confirmation of history is a high-frequency verifiable delay function.
This means that the function requires a sequence of steps in order to obtain and evaluate the uniqueness and reliability of the published value. Solana’s implementation executes the function that uses a sequential hash system that is resistant to pre-images (images of previously prepared hashes). Thus, the output of the transaction appears as the input of the subsequent transaction. Subsequently, the current counter, status, and output are periodically recorded. The clear advantages are scalability and the eradication of the timestamps validity problem. At the moment, it is rather difficult to single out the obvious shortcomings of the protocol due to the novelty of this solution.”
Please note: This post is not a recommendation to buy/sell any particular crypto. The technology surrounding each of the above three cryptos are different. There is continuous advancement happening in this space. Interesting things are continuously happening in the crypto space.
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Keep supporting:)
-Mudrex
Proofofwork
What will be #ETH without miners? ETH will merge and will be no longer minable in a few months, with a fakebull and a big Bear Market on the door, ETH its not doing great.
I am waiting that “merge“ time to see if ETH will perform more better or will be a disaster.
I dont care aboute the price of ETH, but i think a decentralized network proof of work its more better and secured that the new proof of stake where that validators have the hole network in theyr hands.
For me the Code is Law and proof of work the absolute power and security.
El Salvador Adopts Bitcoin - Proof-of-Work vs Proof-of-StakeI've run both mining rigs and am currently running a ETH2 validation node, just because I was curious as to how it was going to work. Here's a side by side comparison between Proof-of-Work and Proof-of-Stake based on my experience.
Also El Salvador adopts Bitcoin as its reserve currency. A big day for BTC!
Watch this major support level on Ethereum to see if it holdsETH has been getting absolutely crushed this week, both in dollar terms and in Bitcoin terms. As you can see, ETHUSD is now testing whether it can hold the 200 EMA, which in my experience is a really key support level. If ETHUSD can't hold this level, then the next stop is about 1440, with additional supports at 1115 and 730.
The Ethereum/Bitcoin ratio is also testing a key support at the 50 EMA:
Ethereum has strongly outperformed Bitcoin this year partly because there was a bit of a speculative bubble in ETH-based coins traded on Uniswap, and partly because ETH is expected to go proof-of-stake before the end of the year. The proof-of-stake merge would make Ethereum dramatically more environmentally friendly and would dramatically reduce transaction fees.
Bitcoin has (rightly) been getting lots of bad publicity because of how horrible the proof-of-work consensus mechanism is for the environment. Bitcoin basically destroys the planet by design, and personally I think the sooner it gets utterly trounced by the competition and utterly wiped from the face of our polluted planet, the better it will be for everyone. Even Elon Musk has recently come around to how awful Bitcoin is for the environment (although I suspect his motives in denouncing Bitcoin really had less to do with environmental impact than with the hole that Bitcoin left in Tesla's balance sheet because Tesla can't book Bitcoin as profit). We're seeing a significant regression to the mean right now, though, with Bitcoin greatly outperforming ETH.
The "cryptocrash" has of course been driven by the Chinese government's crackdown on cryptocurrencies and by the US government's efforts to impose regulatory oversight on the market. A trillion dollars of crypto market cap were wiped out this week. The news is bad enough and crypto is overvalued enough that I suspect ETH ultimately won't hold its 200 EMA support here, though we're likely to get a short-term bounce. We may see a prolonged period of weakness in crypto as traders wait to see how the regulatory crackdowns shake out, but we won't see the same rapid downward momentum we did this week. ETH is likely to return to strength against Bitcoin, however, as the ETH2 proof-of-stake merge progresses. Bitcoin will eventually die of a terminal failure to innovate.
I also expect that Cardano will continue to outperform Bitcoin, and possibly also ETH. Cardano is already proof-of-stake, and like ETH, it has a lively developer community. Cardano was created by academics and has been the subject of something like a hundred whitepapers. The Cardano community has raised several rounds of funding for development, the most recent in excess of a million dollars. Most alts will eventually go to zero, but Cardano is robust enough that I think it has a real chance of challenging the market leaders.
Another coin I'm keeping an eye on is Nano. Nano is a feeless proof-of-stake coin with extremely fast speeds and extremely low energy demands. However, the Nano network operates on a completely volunteer basis, with no compensation for running a node. This is the coin you invest in if you're optimistic about the human race, and you believe that people will do work without getting paid. Nano has recently struggled because its volunteer network isn't robust enough and has been getting shut down by a barrage of spam.
The cryptocrash has reduced crypto's market cap from about $2 trillion to about $1 trillion. Ultimately I think that's still way too high a valuation for what is basically a glorified wire transfer service. But the crypto hype isn't over yet, and we will almost certainly see some strong rallies later this year as the technologies continue to progress. I do think it's time to be very selective about which coins to buy, though, because the technology is maturing and we're seeing the emergence of clear technological and market leaders, and the coins that experience the worst government crackdowns moving forward from here will be the ones with the largest environmental costs.
The Marriage Between Litecoin (LTC) and Dogecoin (DOGE)Everyone is talking about dogecoin these days, but a lot of people don't know that DOGE, for a very long time, have been running in parallel with LTC. Back in 2014, Charlie Lee of the Litecoin Foundation and the DOGE community made an agreement to dual-mine in order to help the two projects support each other during its initial phases. And it worked. Big time, in fact.
Litecoin is known for its non-flashiness (they don't really do much media PR so not many people know about them), preferring to stick to the nuts and bolts of making the system work. Dogecoin, on the other hand, is...well, Dogecoin. But the collaboration between the two opposites are what made it work, I would argue.
DGB/BTC 3D (KuCoin) Descending channel about to retest mid-lineFA: Binance just announced they listed DigiByte today after so much struggling, this is good news but don't buy right now.
This is a POW (Proof Of Work) coin so that means you can earn mining, but also some exchange like ProBit.com allows staking up to 10% reward (APR).
TA: We can see accumulation trend lasted almost a year then broke-out 2 months ago, forming a big parallel channel.
(E)MAs are quite under current price, I'm expecting mid-line channel to be retested and go for the upper-line, or maybe even break it up afterwards.
This is a long-term call so be even more patient than usual for entries to be filled and targets to be reached.
Current Price= 0.00000231
Buy Entry= 0.00000158 - 0.00000134
Take Profit= 0.00000266 | 0.00000342 | 0.00000549
Stop Loss= 0.00000086
Risk/Reward= 1:2 | 1:3.27 | 1:6.75
Expected Profit= 82.19% | 134.25% | 276.03%
Possible Loss= -41.10%
Fib. Retracement= 0.786 | 1.272 | 2
Margin Leverage= 1x
Estimated Gain-time= 3600h
Cup and Handle on POA networkPOA network is one of the coins I am post passionate about. Also, I believe will do really well during this next altcoin rally. POA token is attractive to investors because they are a platform token with a brand new consensus mechanism, Proof of Authority. Proof of Authority, or POA puts identity up at stake instead of holdings. since everybody has only one identity, POA is very decentralized when it comes to their validators. Since other platform tokens with old consensus methods are evaluated in the billions, I believe there is huge potential for POA.
Yesterdays volume was the most since the coin ICO. Since the coin went to the upside, I think this is a big indication of a rally. Also, POA is holding its short term gains very well, which shows investors are not eager to sell anytime soon. A cup has formed after yesterdays rally and i believe a handle too.
The Project idea, the Volume, and the teacup pattern all indicate signs of a rally soon. I am hodling POA token for the altcoin rally, lets see where this ride takes us!
NXT short term sell off but still in a bullish channelNXT broke out of zone 1 and met resistance at long term support line x (green).
Diagonal trendline 2 and long term support line w provide current support.
If we continue through line x, diagonal line 1 will provide resistance in zone 3.
If RSI breaks above the upper trend line, we might see the price enter into zone 3, other wise, if we ride the lower trend line downward we are likely to see NXT move sideways in zone 2 until falling down to zone 1.
Lets watch bitcoin closely.