Proof of Stake: An Overview
With the recent merger, complete Ethereum has had many additions to its network configuration and how it functions. One of these many interesting changes is the implementation of proof of stake. These changes represent an exciting moment in the evolution of this technology and many users have been looking forward to them for quite some time. For example, when participating in Ethereum staking you can receive roughly 4.5% APR. This is just one exciting change that has been brought to the Ethereum network in recent months. One of the biggest changes to understand is what proof of stake is.
Proof Of Stake
Proof of stake in the simplest terms changes the way blocks are verified on the blockchain network. Proof of state is done by staking your coins as collateral for the chance to validate a block as it’s solved and become a validator. As blocks are solved, the validators are selected randomly and those selected confirm the transaction and collect the associated fee. With Ethereum, the number of coins you have to stake to become a potential validator is 32. When a block is solved, multiple validators are used in the process to confirm the information is in itself accurate.
Proof of Stake Versus Proof of Work
Proof of stake and proof of work both serve the same goals on a blockchain and perform the vital role of synchronizing data, validating information, and processing transactions. While both essentially do the same thing the methods involved are very different. Under proof of work instead of validators, there are miners. A miner, in this case, solves a hash to verify the information and in return for solving this problem, they are awarded a coin. A notable difference is in ease of entry. With a point of stake, you simply need to have enough Ethereum to become a validator. By comparison, proof of work has a high barrier to entry requiring the proper computer equipment needed to perform cryptocurrency mining.
Advantages of Proof of Stake
Proof of stake offers many advantages as a method of network security and support. The lower barrier to entry means you have more people involved. This is useful because it reduces network strain, makes the network more robust, and offers a larger community to serve as a self-managing control group. It also makes it easier for you to get involved if you want to as many people have the Ethereum needed to become a validator but may not have the room, power, or equipment needed to assist under a proof of work system.
There is also the environmental factor. The amount of energy used in cryptocurrency mining under the previous proof of work system was a topic of discussion. People wanted a more efficient system that used less power while also making the network itself more efficient. Proof of stake goes a long way in addressing these issues. It uses far less power and is more in line with running a traditional computer application such as a web browser. It also strengthens the network by creating a larger pool of validators to reduce strain while also providing needed services to keep things running.
Proof of stake is an exciting change and one of the many advancements cryptocurrency and blockchain technology are sure to make as the platform continues to mature and grow.