Here’s Why Dogecoin Is Migrating To The Proof-of-Stake Consensus Mechanism

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Ethereum co-founder Vitalik Buterin recently confirmed that he was helping the Dogecoin Foundation migrate from the current Proof-of-Work (PoW) crypto consensus mechanism to Proof-of-Stake (PoS). PoS refers to the processing of transactions and the creation of new blocks on a blockchain in an efficient and environmentally friendly manner. In the case of cryptocurrencies, the database where transactions are recorded is called block chain.

For the uninitiated, the Dogecoin Foundation is a non-profit organization that aims to support the development of the meme coin and has released its first roadmap detailing a number of new projects.

In a recent interview with UpOnly, Buterin confirmed that he was involved in this project and said that virtually all cryptocurrencies will follow the same steps. “All major cryptocurrencies except one have an active plan to switch to Proof of Stake. I think the arguments will be even easier to make when you know that Ethereum is proof of stake and when you know that Dogecoin’s plans are more advanced and Zcash’s plans are more advanced.”

What is POS? How is it better than PoW?

Both PoS and PoW are methods of mining cryptocurrencies. A chain of private computers, a network, constantly works to authenticate transactions by solving complex cryptographic puzzles. This is called cryptocurrency mining. Most legacy cryptocurrencies, like Bitcoin, are based on a proof-of-work mechanism. The PoW mechanism is a traditional form of crypto mining where thousands of computers are required in a mining facility, consuming a lot of electrical power.

So mining is essentially contributing to the blockchain and validating transactions. In the case of PoS, anyone who owns any number of cryptocurrencies can put up their tokens as collateral for blockchain development. In exchange, the user receives a fixed percentage of the committed assets as a reward when a new block is added to the blockchain. This process is called “staking” crypto assets.

A block reward refers to the amount of cryptocurrency you get if you successfully mine a block of the coin. For each new block created, miners gain additional ownership in the token over time through network fees, newly minted tokens, or other similar reward mechanisms.

Previously, proof of work was an attractive concept because people only needed a regular computer to mine coins. Today, with major cryptocurrencies like Ethereum migrating to PoS, specialized and expensive computing devices are needed to mine tokens. Much of the mining is now done by large, well-funded groups, which has removed the general public from the equation. However, with the PoS mechanism, any cryptocurrency holder can now easily contribute to mining and earn specialized rewards.

Also, PoS is better than PoW because you don’t really need mining equipment which drastically reduces power consumption and increases transaction speed. However, there is still no consensus in the crypto community that the PoS model is better than PoW. Some users and well-known names in the market, such as Jack Dorsey, point out that this new method does not offer as much security to the network as does proof of work.

In the meantime, there are no signs that Bitcoin, the world’s largest cryptocurrency, is going to migrate to the PoS system. On the other hand, as the Dogecoin Foundation points out, PoS can offer rewards to the entire Dogecoin community that wants to participate in this process, not just large miners, as is the case with Bitcoin. “It allows everyone, not just heavy users, to participate in a way that gives back to them for their contribution to running the network while giving back to the entire community through charitable causes,” added Vitalik.

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