A specific algorithm is used when mining cryptocurrency. On the Internet, controversy continues which algorithm is better: Proof-of-Work or Proof-of-Stake. The answer is simple as usual. Let us see.
PROOF-OF-WORK: “UNLUCKY” NUMBER 51
Proof-of-Work is the first algorithm used to mine cryptocurrency, although it was created for another purpose, such as protecting the server from DDoS attacks and spam. The essence of PoW is in carrying out complex computational operations using computer technology. In the crypto field, this is a mechanism to confirm the fact that mining is actually carried out.
Proof-of-Work is a secure time-tested algorithm. It is used in the Bitcoin, Litecoin and Ethereum systems, although Ethereum is about to switch to PoS.
But why does PoW start leaning back? In addition to the large cost of electricity, 51% is the first association that arises from using the Proof-of-Work algorithm.
This is the fact that having 51% of the computing power, a user can “rewrite” the history of the coin for themselves. Could you imagine that a multimillionaire can buy a supercomputer, connect a power station to it, and do with cryptocurrency whatever they want? Does it sound unreal?
Thus, once upon a time, a man did not even consider it possible to travel to the moon. Absolutely everything is only a matter of time.
PROOF-OF-STAKE: PERFECT BUT…
Now the entire online community is excited about the idea of switching to Proof-of-Stake algorithm. Take note, that the PoW method was created before the appearance of cryptocurrency in order to protect the server, while PoS was developed specifically for the cryptocurrency. The essence of the work of PoS is that a user does not need to use computing power to get new coins. They need to deposit some of their coins into the network, i.e., a share that will be used to conduct transactions. The reward for confirming new blocks in the network is given to the participant who has left a large amount or has been keeping funds in the network for a long time.
Let’s get back to our example with a multimillionaire, very powerful computer and power station. The fact is that when using PoS, such a sequence of actions is illogical. If they want to attack the entire network, they will have to accumulate a significant portion of the cryptocurrency on their balance sheet, which makes the attack inadvisable from a financial point of view. Moreover, since the attacker has accumulated a lot of coins, they will suffer from their own attack, because it will negatively affect the entire ecosystem of cryptocurrency.
In general, the Proof-of-Stake seems to have a number of obvious advantages: higher validation speed, lower resources for protection, lower commissions.
However, only holders of a certain amount of coins can add blocks to the blockchain. Not everyone has the opportunity to participate in the maintenance of the chain, and respectively, to receive rewards.
When Proof of Work ceased to be effective, Proof of Stake was created. Therefore, the search for solutions in this niche continues. New algorithms that offer alternative deficiencies are appearing. The hybrid LPoS (Leased Proof-of-Stake) algorithm, i.e., “leased proof of ownership interest”, is one of the most notable developments.
This consensus mechanism has its significant advantages: for example, it attracts all users, regardless of their stack, to work on protecting and securing the network, and distributes the reward fairly, as each participant receives their share in proportion to their contribution. This is an excellent opportunity even for owners of a small number of coins to get a stable profit.
The essence of the algorithm is that owners of smaller amounts of cryptocurrency rent their coins to full-fledged nodes, while the nodes form a block, therefore, the owners receive their share of the total reward. This principle is similar to mining pools, which now serve almost the entire Bitcoin network. Due to the initiation and stimulation of network members with smaller amounts, the level of its security is also increased.
The EDC cryptocurrency is one of the few pioneers which is switching its mining algorithm to the LPoS algorithm. All coin holders are merged into masternodes.
Masternode is a certain kind of fund in which users donate their coins, thereby allowing the node to mine EDC and bring profit to all participants of the fund. It captures the number of coins and provides network security when implementing important functions, such as instant confirmation of transactions, as well as ensuring network voting.
The EDC mining is simple and effective: you can simply lease your coins to a masternode. You do not need to keep your personal account open, waste resources and conduct daily transactions. Masternode will start mining and automatically distribute profits among users in proportion to their contribution.
You are guaranteed to automatically receive daily accruals on your EDC wallet and freely manage these coins at your discretion.
What conclusions can we come to?
As a result, cryptocurrency mining algorithms are constantly improving. Currently, a hybrid LPoS algorithm, which distributes profits among all users and practically does not consume your electricity, is the most effective option.
Be sure to try EDC mining, and we are sure you will appreciate the efficiency and safety of this algorithm.