If you are an active follower of the world of cryptocurrency then, you would have heard the Ethereum’s decision to move from the “proof-of-work” concept to the “proof-of-stake” concept and, we are here, to discuss in detail regarding the same.
So, what is this proof-of-work concept?
Let’s see what is POW! It is the concept aimed at deterring the cyber-attacks that have the ability to exhaust the network by sending several fake requests. To do so, the concept follows the mining concept, that is relying on expensive computer calculations to validate the transactions or, to avoid the double-spending. To encourage the miners involved in the process, the new digital currencies are created and rewarded to them. Although the process seems competitive, it is also energy-consuming and cost-ineffective that urged the Ethereum to move to the “proof-of-stake” concept!
Now, what is this proof-of-stake concept?
Again here, the purpose is the same as that of the proof-of-work, which is to validate the transactions to make them legitimate but, the ways employed to achieve it are different. Instead of rewarding the miners, who validate the transactions and/or creates the new blocks, here, the miners on the first-hand are chosen by following a deterministic way, depending on its wealth, that is also referred to as the stake.
Therefore, there is no scope for the “block rewards” for the miners and instead, they go happily with a transaction fee. And, the fact here is, the miners are referred to as the forgers and they are the owners of the coins minted by them.
Forgers’ selection process
As stated earlier, the miners in the proof-of-stake concept are chosen in a deterministic way, which is as follows. There will exist a validator pool, where the users have to join to be selected as the forgers. Anyone who is willing to join this pool will be automatically inducted, without following any priority scheme or any such methods. Also, the number of forgers already present would not restrict your induction into the pool, at any cost!
According to the founder of the Ethereum, Vladimir Buterin, there will be no imposed limit on the number of validators or the forgers that are allowed to join the pool but, at the same time, if there are too many then, the process would be regulated by cutting the reward rate or if there are very few then, by increasing the reward rate.
To intensify the safety of the concept, Buterin has decided to request the validators to submit deposits so that, in the event of any inappropriate actions, the same can be taken away from them as a penalty.
So, Ethereum is all set to provide a more reliable and useful blockchain-based solution, which means, investing in it could make your future brighter. With this Ethereum Code review to the rescue, the process only gets more interesting!