Mining cryptocurrencies and the way in which it is executed can be hard to wrap your head around.
One of the ways in which mining is evolving is moving from Proof Of Work (PoW) to Proof Of Stake (PoS).
With technology advancing and becoming more innovative miners are starting to move from PoW to PoS.
Let’s take Ethereum for example; Ethereum currently holds the second largest market cap, with Bitcoin holding the major. Ethereum is due to launch their 2.0 upgrade, which will see them change their mining algorithms from PoW to PoS.
Both algorithms allow miners to process transactions and in that process they are rewarded with a small percentage of newly minted crypto coins.
NGS Crypto, after trialing through 2019, has found that Proof Of Stake is more efficient and profitable in the long term due to minimizing drastically the high-energy intensive computing power.
There are currently over 1,000 individual tokens or coins that can be mined using either PoW or PoS. One of the most exciting improvements NGS Crypto has found with PoS compared to PoW, is that PoS gives is the ability to switch staking between these different digital assets.
What Is Proof Of Work?
Proof Of Work (PoW) is the original consensus algorithm in a Blockchain network.
In Blockchain technology, the ledger contains a record of all Bitcoin transactions, arranged in sequential ‘blocks’. This is to ensure that no user is able to spend any of their holdings twice. In order to maintain transparency, the ledger is made public. This algorithm (PoW) is used to confirm transactions and produce new blocks to the chain.
When PoW is used, crypto miners compete against one another to complete transactions on the network and as a result they get rewarded.
PoW is usually implemented in most cryptocurrency transactions, with the most famous application of PoW being with Bitcoin (BTC). Bitcoin became the first widely adopted application of the PoW system.
One of the main downfalls to PoW is huge expenditures, or the uselessness of computations. Mining requires highly specialized computer hardware to run the complicated algorithms. The cost in doing so is unfeasible to most.
What Is Proof Of Staking?
Proof Of Stake (PoS) is the concept of a miner, mining or validating block transactions according to how many coins they hold. This means that the more Bitcoin or altcoin owned by the miner, the more mining power they have.
PoS was created as an alternative process to PoW. As mentioned above PoW requires huge amounts of energy whereas PoS gives mining power based on the percentage of coins held by the miner.
Overall, PoS is seen as a less risky procedure in terms of the potential for miners to attack the network, due to the way in which it is structures compensation.
NGS Crypto Utilising PoW and PoS
NGS Crypto is always utilising the best technologies and up to date procedures in order to ensure our mining farm is always operating at full potential.
We specialize in both PoW and PoS when it comes to our mining procedures. It is our core belief that innovation and technology is at the forefront of our digital asset mining operations and ensuring that the most efficient technologies are always used.
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