With some of the recent price records of Bitcoin, Ethereum, Dogecoin, and other cryptocurrencies, the positive and negative aspects of cryptocurrencies have become a major focus once again. One aspect that is particularly controversial, is the huge amount of energy needed to progress and update the blockchains.
Most big coins use Proof of Work as a consensus mechanism, which is inherently inefficient and not sustainable. A newer alternative is Proof of Stake which hopes to improve upon the flaws of Proof of Work. Let’s have a look at some of the pros and cons of both concepts.
Proof of Work is the most common method of achieving and maintaining consensus in a blockchain. It’s a way for one party to prove that a significant amount of computational effort has been made. All other parties can then verify the result with very minimal effort.
In the Bitcoin blockchain, this is done with a hashing algorithm (SHA-256). Hashing algorithms can be computed very quickly in one direction, but they are almost impossible to reverse. Every block in the blockchain contains a number of transactions and the hash of the previous block. The miners that want to progress the blockchain try to find a hash value for all of this data by adding an incremental integer until they find one where the hash value is below a certain numerical value. The threshold value can be adjusted to set the difficulty of the problem. This controls the likelihood of guessing the correct result and therefore ensures that the time between blocks stays roughly consistent.
Once a solution has been found, the person who got the result is rewarded with new Bitcoins and the transaction fees from the block. Then the process starts over with the next block. This is called mining because just like in traditional mining, new and very valuable resources are being found/created.
Modern graphic cards and especially ASIC miners can compute a hash value very quickly. Therefore, the number of attempts needed to correctly guess the next value is extremely high. The bitcoin network currently has a hashing power of 177 TH/s (that’s 177,000,000,000,000 hashes every second). As you can imagine, all of this computing power takes an enormous amount of energy.
Proof of Stake is another method of updating the blockchain. It removes the energy-wasting mining process that Proof of Work suffers from. To emphasize the differences, Proof of Stake uses another term for mining: Blocks are “forged” rather than “mined”.
To participate in the forging process, users need to own a certain amount of the currency and lock it into the network as their stake. The chance of winning a block increases with the size of the stake. The winning node can process all transactions in the block and append the block to the blockchain. It is also rewarded with all of the transaction fees of the transactions in the block. To prevent the wealthiest nodes from dominating the process too much, there are different methods of randomly selecting the winning node.
The first cryptocurrency to make use of Proof of Stake was Peercoin. While Proof of Work is still the most common method, more and more coins are using Proof of Stake. Ethereum, the second-largest cryptocurrency, has started to implement plans to switch from Proof of Work to Proof of Stake.
By far the biggest problem of both of these methods is the power consumption needed for Proof of Work systems. The Bitcoin blockchain alone consumes more power than Argentina, which would place it in the top 30 of the most power-hungry countries. Proof of Work isn’t sustainable in the world’s path towards a greener future and coins that rely solely on Proof of Work will probably lose their value in the mid to long term. This makes the energy efficiency of Proof of Stake its biggest advantage.
Besides power consumption, the number of transactions per second in Proof of Work is another big problem. The Bitcoin network can only handle up to 7 transactions per second (in reality more like 4 per second), which isn’t even close to enough to function as a global payment processor. Because the number of transactions is so limited, the transaction fees have gone up significantly in recent years and are now somewhere around 20$ for a single transaction, which doesn’t really work if you want to buy a coffee for 2$.
While Proof of Stake itself doesn’t improve scalability, it opens up the possibility to dramatically increase the number of transactions per second with a concept called Sharding or Shard Chains.
Another benefit of the Proof of Stake system is the barrier of entry. You don’t need to invest in expensive mining hardware, which makes it easier to participate in the forging process and more nodes in a network are beneficial against attacks. Although you still need a large investment to acquire enough coins for the staking threshold.
A potential security problem for cryptocurrencies is the 51% attack. If a single entity controls 51% of the hashing power in a mined coin or 51% of the stakes in a staked coin, they can use their majority to rewrite the blockchain and add fraudulent transactions to their benefit.
However, this isn’t a real problem for Proof of Stake because, in order to gain a 51% stake in the currency, the attacker needs to own at least 51% of the coins, which is not only very expensive but also goes against the interests of the attackers themselves. When they own such a large share of the currency, they wouldn’t have any interest in lowering its value by an attack.
Also, stakeholders that are behaving maliciously and are caught can lose a portion of their stake, which further disincentivizes any attacks.
A disadvantage of Proof of Stake is its relative infancy. It isn’t as battle-tested as Proof of Work, which may reveal problems when it is used in large-scale currencies like Ethereum.
One of the most common criticisms of Proof of Stake is that the rich are getting richer because you need a large amount of currency to be able to stake the network, and the chance to win a block is based on the size of the stake, i.e. the more coins you own, the more coins you get.
It’s certainly the first thing I thought when I heard about the concept. However, when you think about it, it is just as much of a problem for the Proof of Work model or — let’s be honest — the world as a whole. The rich are able to buy the expensive hardware needed for mining and they are able to open mining centers in countries with low electricity prices. In fact, only a few big mining pools control a big portion of the Bitcoin network.
It might be more difficult to get started in a Proof of Stake model though. I have been doing some small-scale mining with my consumer graphics card recently and it has been profitable after electricity costs. I guess I could have spent the electricity money on some staked coins instead, but it would only be a one-to-one transaction without any profit and it would take a very long time to get enough coins to start staking them this way.
CoinFlip Installs Its First Three Bitcoin ATMs in Alaska
The company aims to install four more ATMs in the state by the end of the summer.
CoinFlip, a leading Bitcoin ATM provider, announced that it had expanded its operations to Alaska, United States, by deploying three Bitcoin ATMs on Thursday. According to the company, it has also planned to install three additional Bitcoin ATMs by the end of this year’s summer in the state.
With the new machines installed in Anchorage, users will not only be able to buy Bitcoins (BTC) but Dogecoin (DOGE), Ethereum (ETH), and six other cryptocurrencies with 24/7 customer support. The locations are Anchorage Wine House at Minnesota, Anchorage Wine House at Huffman, and Anchorage Wine House at Jewel Lake. With the installation of the ATMs in Alaska, CoinFlip now has over 2,500 machines installed in 47 of the 50 states in the US.
About the announcement, Ben Weiss, CoinFlip CEO, commented: “We’re excited to bring CoinFlip ATMs to Alaska this month. It has been our mission to help build financial wealth through inclusive financial systems so that anyone interested in investing can participate. We look forward to connecting Alaskans with our award-winning customer service to make Bitcoin and other cryptocurrencies more accessible to the local community.”
Other Companies Installing Bitcoin ATMs in the US
Another company joined the bandwagon of deploying Bitcoin ATMs in more US states. Finance Magnates reported in April that Coinme expanded operations in the state of Florida with the installation of more than 300 Bitcoin-enabled Coinstar kiosks.
Get Paid to Learn about Cryptocurrency TradingGo to article >>
The Bitcoin cash machines have been strategically installed inside grocery chains like Winn Dixie, Fresco y Mas, and Harveys across small towns and big cities. The company aimed to bring Bitcoin purchasing facilities to the local groceries of the Florida residents.
Coinme is one of the major Bitcoin ATM operators in the United States, with around 6,000 Coinstar kiosks installed in supermarkets across 45 states.
According to CoinATMRadar metrics, United States has 18,936 Bitcoin ATMs, becoming the leader globally, followed by Canada with 1,526, and the United Kingdom with 196.
What is Phemex’s all-new Learn and Earn program?
A decade ago, Bitcoin was merely a philosophical research paper for a new type of digital currency. Today, there is no major technology or financial publication or news portal with no cryptocurrency stories or blockchain news.
From being ridiculed as magic internet money backed by thin air to narratives of the wild west, nerdy money, get-rich-quick schemes, and gaining mainstream consciousness as we settle into 2021, the crypto industry has indeed seen it all.
Since Bitcoin’s inception over ten years ago, things have changed considerably. Industries across the world have embraced its underlying blockchain technology. Its main characteristics include decentralization, transparency, immutability, and automation that has the potential to create a multitude of use cases and replace legacy frameworks.
The digital asset industry has not been that lucky. The narrative of “Blockchain, not Bitcoin,” is still very much prevalent in several regions. Countries struggling with political instability and hyperinflation, such as Venezuela, and Argentina have witnessed a formidable interest in cryptocurrencies. The sentiment resembled the nations that have a massive unbanked local population.
Today, the great dream of cryptocurrency is still very much alive despite all its struggles. The cryptocurrency industry has not only unlocked access to financial services for users around the globe it has also opened avenues for new applications. The remittance, for one, can be a nightmare for many living in developing countries. Crypto and blockchain technology aims to settle transactions instantly with significantly lower or even negligible fees.
The main objective behind asset-backed tokens, on the other hand, is to grant ownership to assets like real estate and precious metals. In addition, stablecoins have their own use cases and have seen unprecedented growth because they trade uniformly with fiat. The list does not end there.
While pessimism has dwindled, there is still plenty of skepticism around the entire asset class.
What’s impeding crypto adoption?
There are numerous reasons for the hindrance. But one that stands out is the lack of education. It is a daunting issue that plagues the cryptocurrency industry even today, in this day and age when everything is just one click away. Many people don’t understand the industry. It is as simple as that.
The digital asset realm is a complex one. While there are plenty of resources to fall back on, there need to be better and more accessible vehicles, one that is perfectly curated for the newbies – simple and easy-to-follow lessons on everything crypto and blockchain. And what’s better than earning a reward for learning this groundbreaking technology? Seems far-fetched? Not anymore. Pemex’s newly launched program dubbed ‘Learn and Earn’ aims to do just that.
Singapore-based cryptocurrency exchange Phemex is one of the most prominent platforms in the world. Just two years since it was first launched, Phemex has already emerged as one of the most trustworthy exchanges in the industry. Its user base exploded quickly to over a million traders, thanks to user-friendly platforms and unique offerings.
It has recently rolled out an all-new educational program called “Learn and Earn,” which aims to provide users with simplified concepts on different cryptocurrency and blockchain-related concepts. This program includes an in-depth course structure coupled with intuitive lessons and interactive videos that offer a unique and fun learning process. But it does not end there.
Phemex plans to reward its users via Learn and Earn after the completion of each lesson. How? Users will have to take a short quiz to test their knowledge, and if all the answers are correct, they will be incentivized.
It is one of the most beginner-friendly and fun ways to learn more about the new financial world. Learn and Earn is put together into a few fundamental courses, each comprising its own set of sub-lessons. These cover introductory passages, explainer videos, and a final quiz for users to test their knowledge. Upon answering all questions correctly, Phemex offers a reward in the form of trading bonuses and cryptocurrencies.
Lean and Earn’s first set of courses proceed with the platform’s essential features. This program encompasses some core concepts about the workings of cryptocurrencies and the process of buying, trading, and selling them on an exchange. Rewards will be in the form of trading bonuses that participants can use with perpetual contracts on Phemex to exercise their proficiency on the subject matter.
In the days to come, Phemex also plans to broaden its course material and reward users directly in cryptocurrency assets. However, in order to receive rewards, the users are required to complete KYC protocols. As of now, the program is not widely available, but the team behind the project is working on expanding the Lean and Earn initiative on a global scale.
In short, Learn And Earn aims to cater to mainly the beginner but is also available for experienced crypto enthusiasts who seek to know more about the industry and how to trade digital assets seamlessly. This program is essentially for everyone who wants clarity and eventually wants to foray into the trading space of cryptocurrencies but does not know where to begin. It is open to anyone who wants to build a passive income stream by just learning about cryptocurrencies.
Incentivising users for learning about the technology, what a great way to spur adoption as well as trading activity! This will help more and more individuals dispel myths and filter out FUDs and FOMOs that are often endorsed by the critics and the flag bearers of centralized financial infrastructure.
Ethereum to $20,000? Factors Behind The Bold Call
Ethereum could reach $20,000 by 2025 according to a Finder’s panel.
Ethereum has since been gaining momentum, starting out at $1,000 at the beginning of the year and reaching an all time high of $4,196.63, according to Coin Metrics. Before losing steam and dropping down to its current price at $2,400. Clocking an average growth rate of 197.4% in 2021.
This massive run has given the » Read more
” href=”https://www.newsbtc.com/dictionary/coin/” data-wpel-link=”internal”>coin a lot of popularity. Ethereum currently ranks as the second most popular » Read more
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Related Reading | Billionaire Tim Draper: Bitcoin Will Reach $250,000 By The End Of 2022
With so much support pouring out for the » Read more
” href=”https://www.newsbtc.com/dictionary/coin/” data-wpel-link=”internal”>coin, investors in the » Read more
” href=”https://www.newsbtc.com/dictionary/coin/” data-wpel-link=”internal”>coin have been very bullish on it. Lots of analysts believe that Ethereum is poised to overtake Bitcoin as the most popular » Read more
” href=”https://www.newsbtc.com/dictionary/coin/” data-wpel-link=”internal”>coin in the market. So much technological advancements are being carried out on the blockchain that its use cases seem to be endless.
Impact Of DeFi and NFTs
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About 70 percent of the panel agreed that with DeFi and NFTs, Ethereum now has more use cases than Bitcoin.
John Hawkins, senior lecturer at the University of Canberra, went against the grain to say more use cases would not necessarily benefit the » Read more
” href=”https://www.newsbtc.com/dictionary/coin/” data-wpel-link=”internal”>coin. He expanded on this by saying that Ethereum will most likely get dragged down with Bitcoin. Despite having more use cases.
Ethereum price sits below $2,5000 | Source: ETHUSD on TradingView.com
With staking and yield farming with DeFi, investors have found another way to put their investments to work, while at the same time benefiting the network.
With Ethereum 2.0 on the horizon, developers are looking to replace the existing Ethereum blockchain with a new one. This will help to solve the current bottlenecks of the network. It will also increase the number of transactions being made on the network. Hopefully helping to reduce the exorbitant fees being charged for transactions when network traffic is high.
Ethereum Predictions By Finder’s Panelists
The Finder’s panel consisted of a number of prominent panelists. Present were Dr. Iwa Salami from the University of East London. COO of BitBull Capital, Sarah Bergstrand. Vishal Shah, CEO of Alpha5. Head Economist at ConsenSys, Lex Sokolin. Amongst others.
A good number of the panel seemed to agree that while the » Read more
” href=”https://www.newsbtc.com/dictionary/coin/” data-wpel-link=”internal”>coin might not have much further to run this year, the next four years is going to see a massive run.
CEO Vishal Shah was on the more conservative side. He predicted that the » Read more
” href=”https://www.newsbtc.com/dictionary/coin/” data-wpel-link=”internal”>coin would not be worth much more than it is now. Putting it at just $4,000 by 2025. Shah believes that Ethereum will continue to perform. But that the unlimited supply of the » Read more
” href=”https://www.newsbtc.com/dictionary/coin/” data-wpel-link=”internal”>coin is a demerit to it. He also added that Ethereum was in a race with other protocols for the its usability profile. And that there are other faster and cheaper chains that will rival the » Read more
” href=”https://www.newsbtc.com/dictionary/coin/” data-wpel-link=”internal”>coin in the future.
Related Reading | TA: Ethereum Price Holds Strong, Why Dips Remain Limited Below $1,850
Others did not see this as a befitting forecast. Citing the upgrades being done on the network, Sarah Bergstrand, Chief Operations Officer at BitBull, gave a price prediction of $100,000 per ETH by the end of 2025. A staggering forecast.
She believes that mass adoption of Bitcoin will be followed by mass adoption of Ethereum. Also that the upgrades being carried out on the network will help to push the price higher.
Dr. Paul Ennis put his prediction at $10,000 by the end of 2025. Stating that Ethereum is currently undervalued.
Dr. Salami went on to give the » Read more
” href=”https://www.newsbtc.com/dictionary/coin/” data-wpel-link=”internal”>coin a $20,000 forecast by 2025.
This brought the average of the panel’s predictions to $19,842 per ETH by 2025.
Featured image from Blockchain News, chart from TradingView.com