December 9, 2022
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Ethereum will be revolutionized by the Proof of Participation

The so-called Proof of Stake (PoS) is a consensus algorithm that aims to be faster and cheaper than Proof-of-Work (PoW).

The first cryptocurrency ever created in the world, Bitcoin, was created using PoW as a consensus algorithm and still uses it today. In fact, all first generation blockchains, like Litecoin, use it, and even for Ethereum in 2015, when it was created, PoW was chosen because it offers high levels of security.

However, while PoW offers a high level of security, it does have some major limitations: the number of transactions it can validate and energy costs.

The first limitation, for example, means that only about 3,000 transactions can be validated on the Bitcoin blockchain every 10 minutes, a small fraction of the number validated by Visa, for example.

This limitation affects all blockchains that use PoW, making them non-scalable, except for the use of second-tier solutions, such as Lightning Network, that do not validate chain transactions.

The other problem is related to the energy consumption of the work required by the machines used to validate the transactions. However, this is a problem that affects miners only economically, while the environmental impact affects everyone.

The proof of bet does not have these limitations.

How the Proof of Participation works

Or rather, with respect to the volume of validable transactions, it is enormously larger than that of PoW. There are now several second and third generation blockchains that use PoS and do not appear to have scalability problems.

With regard to energy consumption, however, the advantage is enormous, since the Proof of Participation requires a minimum consumption of electricity.

In fact, instead of using the work of computing machines, to validate transactions, it uses nodes that have a significant amount of tokens in storage. Since these tokens are only valuable if everything works correctly, their holders have a vested interest in validating transactions correctly. So far, there are no major known issues with PoS in this regard.

The Ethereum project was born with PoW and, so far, has maintained this consensus algorithm. However, the two limitations mentioned above mean that the commission costs that need to be paid to miners for a transaction to be validated are now high, but with the switch to proof of bet, we expect a clear reduction in the cost of PoW and a big step towards greater scalability.

In fact, Ethereum’s PoS-based parallel blockchain, Beacon Chain, is already active, but still only in the testing phase. It is not known when it will be integrated into the mainnet, but it is possible that by the end of 2021 these tests will end, and release dates can be scheduled.

When Ethereum 2.0, based on Proof-of-Stake, is finally released, it will be a kind of quantum leap for the project, allowing it to support a much larger number of transactions than it currently does, and probably comparable to networks like Visa, while significantly reducing commission costs. It will be a real fundamental revolution, the effects of which can greatly benefit the process of mass adoption of Ethereum.

The important thing is that nothing goes wrong and that everything works as it does now. In theory, this is perfectly possible, but it is not surprising that developers are taking too long to do the right thing. Ethereum is now worth hundreds of billions of dollars and it would make no sense to risk blowing it up.

Source: Cryptonomist

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