In the cryptocurrency universe, the two most important features are decentralization and immutability properties of the blockchain. Blockchains are distributed data records on computers on a network, called ‘nodes’, which maintain the entire data history of the blockchain in a shared manner. In simple terms, these nodes keep the blockchain secure from any central server fails and hacks, meaning the network will not be compromised if any node is attacked.
Over the years, node developers have created various consensus mechanisms to verify transactions and create new blocks or update the blockchain. The two most popular consensus mechanisms today - proof of work (PoW) and proof of stake (PoS) - have raised various debates across the crypto community, each side holding an argument on why their mechanism is the best.
Bitcoin and Ethereum, the two most popular cryptocurrencies, currently use the PoW consensus mechanism. However, Ethereum has been in plans to transition to the PoS algorithm as part of its development roadmap aiming to reduce the gas costs on the blockchain. The ETH 2.0 transition, expected to launch in 2022, will end the seven-year consensus with the energy-intensive PoW algorithm.
The PoW consensus algorithms remain the most robust and well-tested across many crypto projects. However, the mechanism is widely criticized for its high electricity consumption, adverse media coverage, the increasingly centralized nature of mining operations, and slow transaction times - hence blockchain communities choosing to move to better solutions. Notwithstanding, China shut down its Bitcoin mining firms, and Tesla’s CEO Elon Musk announcing the electric vehicle company had stopped accepting BTC as payment due to “environmental reasons” didn’t help PoW’s cause.
Nonetheless, PoW is here to stay for the long term despite the multiple deficiencies it faces. Following vast testing and experiments, Minima, an ultra-lean blockchain, has come up with solutions to solve the high electricity problem and centralization problems in PoW mechanisms. The platform incentivizes the community to secure the system by rewarding tokens daily and a welcome reward for users who set up a node and run it directly on an IoT device.
A hope for PoW chains?
Minima is creating an ultra-lean blockchain protocol aiming to solve the issues facing the PoW algorithms, allowing users to verify transactions using a mobile phone or an IoT device. The platform allows every user to run a full constructing and validating node, using the power of the community to secure the blockchain.
Minima promotes the decentralization and immutability qualities of a blockchain. The platform creates the possibility of operating a completely decentralized network while enhancing scalability, inclusivity, and robust security. By reducing the net
“This level of complete decentralization is censorship-resistant by ensuring that there can be no overarching authority controlling the network,” a post on Minima blog reads. “This creates an ecosystem that is truly autonomous and accountable.”
The base protocol layer enhances the advantages of PoW blockchain technology while minimizing the existing vulnerabilities. To accomplish this, the protocol consists of an on-chain layer (Minima), which is the verification layer of the protocol, and Maxima, the off-chain protocol which is the transactional layer of the protocol.
The example above shows there’s hope after all. But could these proof of work consensus algorithms blockchains survive in a market that is rapidly switching to a PoS model and other consensus mechanisms?
The future of proof of work algorithms
Some blockchains are choosing to move away from an energy-intensive proof-of-work mechanism to proof-of-stake, proof-of-burn, and proof-of-weight, etc. These less energy-intensive solutions are only sufficient for specific uses that require permissions to be in place and secure the network. However, public blockchains derive their intrinsic value and permissionless nature from the backing of decentralized proof-of-work miners.
Going forward, PoW chains will need to work on developing lean blockchains that are supported by every IoT device, are censorship-resistant, and has complete decentralization in their mining process. As proof-of-work steadily grows, environmental concerns and electricity consumption will be key issues to address to offer a better protocol for everyone and enhance faster transactions on the network.
The future is set to favor both the proof of work and proof of stake mechanisms and other mechanisms that come up in the future. PoW algorithms, which scale and are deeply rooted in cryptographic security measures, could lead the future of cryptocurrency and blockchain technology.
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2021-09-10 12:17:11
