Proof-of-Work and Proof-of-Stake: what is it in simple terms?

 Proof-of-Work and Proof-of-Stake: what is it in simple terms? The key feature of this mathematical problem is asymmetry: it should be moderately difficult for the miner, but easy enough for the network as a whole. This is achieved through cryptography. Every miner in the network tries to solve the problem first; at the same time, it can actually be found only by direct enumeration, so many attempts are required for a successful solution. An example, perhaps a little fantastic, but illustrative. Imagine being handed a keyboard with several million numbered keys. You are looking for exactly the key that you need to complete the task correctly, but you do not know its number, so you sort through everything. There is a crowd around you, also looking for the right key. Suddenly you found the right key, tell everyone “guys, I found the key, its number is 22 875”. Everyone around starts checking key number 22875, and oh yes, it is. The one who finds the key first wins a prize. Each is th...

Benefits of PoS

 Benefits of PoS

The main advantage for users is that they do not need to use powerful computer equipment. Coin mining can be carried out on ordinary personal computers.

The main advantage results in low electricity costs, which has been a major problem with PoW mining. Users do not need to install additional boards, coolers, voltage stabilizers and other types of equipment that contribute to the stable operation of powerful equipment. It is enough for modern forgers to have a powerful laptop or personal computer, as well as constant access to the Internet.

Cryptocurrency is protected from inflation. Due to the known number of coins that are on the market, there is no need to create new coins, which would lead to a depreciation. Fluctuations are possible only due to dynamic changes in the situation on the exchange, which reduces the number of factors that negatively affect the rate of coins.

Here is the minimum amount of empty cryptocurrency that does not have a significant justification. This provision indirectly affects the cost of energy carriers, stabilizing this indicator.

Users have a high level of involvement in the cryptocurrency mining process. For efficient mining, users need to buy a large number of coins. Having large assets, the investor becomes interested in the development and stability of the project. Members of the cryptocurrency community always support it when launching a new coin. In theory, the miner can easily switch from one type of coin to another if he notices that the project is unprofitable. In practice, this will take a certain amount of time, which reduces the efficiency of this process. Also, when transferring funds, the conversion will entail some losses, so it often becomes unprofitable to switch.

This is a promising algorithm that may become the main one in the future if mining using other algorithms becomes impossible. An increase in the power of mining equipment will lead to the fact that all coins will be mined even in the most popular chains, despite their complexity. In this case, transactions can only be carried out via PoS.