MORE IDEAS FROM THEARTICLE
There are two most common types of consensus protocols, proof of work (PoW) and proof of stake (PoS). A consensus protocol has a few main functions; selecting a block producer, validating the block is correct, and rewarding the block producer. The biggest difference between PoW with Bitcoin and PoS with Cardano is how the block producer is selected.
PoW is based on a physical resource, which requires hardware machines such as ASIC.
PoS is based on a virtual resource. Cardano uses their native token, ADA, to assign which stake pool gets to produce the blocks in the blockchain.
To distort Cardano’s network you would need to control the majority ada. Below is a calculation of the amount of money required to have majority control of Cardano’s network.
Cardano’s protocol goes through a rigorous peer-reviewed process.
Bitcoin is one of the most secure protocols but what makes it incredibly secure is the physical resources and energy consumption required to take over the network. To distort and manipulate the blockchain, an attacker requires having the majority control of the hashing power. Security comes at a cost and the energy consumption will increase over time as the Bitcoin network grows.
But what if you can have your cake and eat it too? Use a fraction of the energy consumption with the same level of security.
The Proof of work concept existed even before bitcoin , but Satoshi Nakamoto applied this technique to the digital currency revolutionizing the way traditional transactions are set.
In fact, PoW idea was originally published by Cynthia Dwork and Moni Naor back in 1993, but the term “proof of work” was coined by Markus Jakobsson and Ari Juels in a document published in 1999.
But, returning to date, Proof of work is maybe the biggest idea behind the Nakamoto’s bitcoin white paper – published back in 2008 – because it allows trustless and distributed consensus.
Bitcoin is a peer-to-peer online currency, meaning that all transactions happen directly between equal, independent network participants, without the need for any intermediary to permit or facilitate them. Bitcoin was created to allow “online payments to be sent directly from one party to another without going through a financial institution.”
Ethereum is a “world computer”: It lets people build apps & products with money baked into the code. If you believe that web3 is going to continue to grow, then you likely believe that over time,
Ethereum will become the “settlement layer” of the internet: All sorts of transactions (whether on-chain or even Visa) will turn to Ethereum to exchange funds and keep secure, immutable records.
Owning ETH is like owning shares on the internet. Demand for ETH will go up with increased web3 adoption, while upcoming changes will decrease the supply of ETH and let more value accrue to holders.
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