Steemit Crypto Academy Contest Season 1 Week 3 - Blockchain through the concepts by @srrebullient

Hello everyone, I am glad to be taking part in the third week of the SteemitCryptoAcademy engagement contest.

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In this week's contest which is titled Blockchain through the concepts, we have been asked to discuss on any blockchain term, so let's go!

Tell us about your favorite concept or term related to blockchain, try to be explanatory and make sure to give your opinion

PROOF-OF-STAKE

The fact that cryptocurrencies are not under the control of any formal head which is a term we regard as decentralization, has brought in various ways cryptocurrency transactions can be properly verified and this is what has lead to the emergence of Proof-of-stake consensus mechanism.

Proof-of-Stake is one of the various types of consensus mechanisms used in validating cryptocurrency transactions. It does this by allowing coin owners to stake their coins and in turn operate as validator nodes.

To know more about staking, you can visit one of my articles using this link.

The validator node whose work is to verify transactions and add accurate ones to the blockchain gets randomly selected by the Proof-of-Stake protocol whenever there's a block of transactions ready to be processed.

This verification is done with a lot of accuracy as a validator node will certainly lose some of its stakes if there's a proposal of adding an inaccurate transaction to the block.

Choosing validators differs with each Proof-of-Stake protocol as some choose based on how long a node has been active whereas some choose based on the quantity of stake.

The latter has to lead to some individuals coming together in other to increase their chances of being selected to validate transactions and they in turn share the rewards amongst themselves.

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Why do you think it is important in the blockchain?

The Proof-of-Stake consensus mechanism is important in the blockchain due to several reasons which include;

• Decentralization

The Proof-of-Stake protocol operates in a decentralized manner as those who stake their coins in other for it to be used in verifying transactions all earn rights to decision making on the blockchain platform.

This governance right allows them to either accept or reject proposals with the final decision being made in consideration with the decision of the majority.

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• Scalability

Scalability is one of the major problems with Proof-of-work which explains why new blockchains do not longer operate using such protocol.

The Proof-of-Stake has more scalability due to its ability to verify multiple transactions very fast and efficiently thus encouraging high transaction speed.

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• Low energy consumption

This is also one of the problems with proof-of-work that lead to the emergence of Proof-of-Stake. Miners in Proof-of-work perform their mining activities using higher energy consumption computers that perform complex mathematical calculations. But in Proof-of-Stake, transactions are verified by nodes through their staked coins.

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• Low transaction cost

The Proof-of-Stake consensus mechanism also operates on lower transaction costs when compared to other protocols such as proof-of-work with an example seen on the cost of transaction in Cardano and Ethereum blockchain respectively.

Do you think that the existence of the blockchain would be possible without this concept? Is there an alternative or similar term?

Most apparently, the existence of blockchain is totally independent of the Proof-of-Stake consensus mechanism and the reason being that there are other mechanisms used by various blockchains in verifying tractions and they include;

• Proof-of-work
• Proof-of-brain
• Delegated Proof-of-Stake
• Leased Proof-of-Stake, etc.
• Proof-Of-Burn
• Proof-of-Authority
• Proof-of-Elapsed Time
• Proof-of-capacity
• Proof-of-Activity
• Proof-of-importance
• Direct Acyclic Graphs (DAGs)
• It Takes Two To Tangle (IOTA)
• Byzantine Fault Tolerance, etc.

Another evidence that the blockchain's existence isn't tied down to Proof-of-Stake is the very fact that the Bitcoin blockchain which uses a proof-of-work consensus mechanism has been in existence before the emergence of Proof-of-Stake.

Do you think it is possible to improve this term in some way? Explain us how

In the Proof-of-Stake protocol, rewards are distributed based on the number of holdings with larger holders earning more rewards in form of incentives thus leaving smallholders will fewer rewards.

The fact that some Proof-of-Stake protocols select validators based on the quantity of stake, makes large holders enjoy much influence during transaction verification and this leads to the discouragement of users with small stakes.

In addition, some Proof-of-Stake protocols do not allow users to unstake their coins at any time of choice rather staked coins are locked up for a specified period thus leaving the owner with the ability to trade them.

Also, there's not enough security in Proof-of-Stake when compared to proof-of-work.

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The Proof-of-Stake consensus mechanism can be improved if users can earn more rewards on their stakes because the incentive earned on staked tokens is significantly small thus making most investors rather provide liquidity with their tokens and earn interests which is much higher than incentives earned on stakes.

CONCLUSION

The Proof-of-Stake consensus mechanism remains among the best consensus mechanism due to its scalability, efficiency, and low transaction fee.

In as much as this mechanism is effective, it is not efficient due to its lack of maximum security when compared to the likes of proof-of-work.