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When it comes to cryptocurrencies, many investors are unaware of the processes that are executed while performing transactions. To ensure safety and security there are two main mechanisms that run in the backend, they are Proof of Work and Proof of Stake. Ethereum, a major cryptocurrency currently runs on a Proof of Work mechanism is planning to shift to a proof of stake one to verify its transactions.
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When it comes to cryptocurrencies, many investors are unaware of the processes that are executed while performing transactions. To ensure safety and security there are two main mechanisms that run in the backend, they are Proof of Work and Proof of Stake. Ethereum, a major cryptocurrency currently runs on a Proof of Work mechanism is planning to shift to a proof of stake one to verify its transactions. This article will help us understand what exactly is Proof of Stake and why did Ethereum opt for it. For some of the new investors who would be interested to invest in Ethereum, we would be helping you with the best place to buy Ethereum in Canada.
Let’s start by understanding the Proof of Stake mechanism.Proof of stake is a method by which miners can validate the transaction in a blockchain and is introduced as an alternate to the Proof of work method which was the original consensus method in the blockchain and is used by many major cryptocurrencies like Bitcoin. In the proof of stake method, the miner holding the greatest percentage of coins is given the job of validating the transactions of the Blockchain and is rewarded a basic network fee for his work. Proof of stake was solving several purposes that Proof of work lacked, some of these points are as follows:
Lesser energy consumption:In the proof of work mechanism, a lot of energy is required due to the requirement of high computing power to solve the cryptographic algorithms. Proof of stake gives the power to anyone holding a higher percentage of currency which saves a lot of energy and does not require any computing power.
Less risky when compared to Proof of work:In a proof of work mechanism, it is very easy for a miner with a higher computational power to manipulate the blockchain and create a malicious block whereas in the proof of stake scenario the hacker would need to own 51% or more of the total cryptocurrency he is trying to hack which is impossible and thus making it a safer option.
Why did Ethereum switch to a proof of stake mechanism?Ethereum in its new upgrade announced that it would be switching to a proof of stake mechanism from its current proof of work one, this is mainly cause Ethereum wants to reduce carbon emissions by saving electricity. The current switch would reduce Ethereum’s energy consumption by 99%.
What next?Now that you know how the proof of stake mechanism works then all you need to do is execute your first transaction. When it comes to investment options, both categories of coins are great to look at. Some proof of work coins such as Bitcoin, Bitcoin Cash have given humongous returns and if you are now wondering how to buy Bitcoin Cash in Canada or how to buy Ethereum then all you need to do is visit the Netcoins website and follow the instructions listed there to get started with your first trade.SOURCE CREDIT: https://medium.com/@netcoinscanada/what-is-the-proof-of-stake-system-in-cryptocurrencies-3bfdfc9accf1
