Bitcoin Latinum’s PoS Algorithm is the answer to what Bitcoin currently struggles at. While the PoW has paved the way for cryptocurrencies, it cannot handle the strain of the modern world’s requirements. While computation PoWer was the actual currency behind Bitcoin’s mining rewards, PoS is reliant on the size of staked tokens to mine the blocks. This takes away the focus off the burdens of decentralization on expensive hardware and electricity while at the same time proving beneficial on other aspects
While we have ‘miners’ in PoW which solve complex mathematical problems to compete for block publishing, PoS has ‘validators’ who get the chance to achieve the right to add blocks to the ledger. Bitcoin Latinum PoS Consensus algorithm takes the mantle to solve Bitcoin’s current set of challenges. It provides the following advantages
Less Electricity Consumption
While the PoW monopolizes on heavy computation-based problem solving to gain reward, PoS relies upon the staked tokens. If the staking node publishes an illegal transaction, then the staked value is lost by the node, and it can be banned in the future to participate in consensus.
This makes PoS more affordable as you don’t require expensive mining rigs to compete to participate in the network. It also leads to less electricity consumption. With some sources claiming it to cut down electricity consumption by 99% (confirmed by Ethereum team), making it the green alternative for cryptocurrencies.
In order to make a network sustainable, the teams must ensure that the transaction validation process is energy-efficient and makes it impossible for any single entity to become the majority player. The PoW-based networks incentivize miners for upgrading their equipment timely, which again isn’t very economical. In line with this, the crypto and blockchain community believes that Proof-of-Stake (PoS) is a better choice when it comes to choosing a secure and green consensus mechanism.
Instead of buying costly equipment that further damages the environment, users can participate in validating the transactions by simply staking a portion of their tokens. Besides, the PoS mechanism punishes the validators for behaving against the network conditions. This removes the need for electricity, making a way for energy-efficient blockchain-based networks that are bullet-proofed from 51% attack.
Due to PoS capability to validate networks quickly without wasting natural resources, even the Ethereum network is transitioning from PoW to PoS. With the new mechanism in place, ETH holders will be able to stake their portion of holdings to validate transactions. This can be done by simply using a laptop. Moreover, stakers can delegate their tokens to validators participating in the Ethereum network’s consensus. It means stakers don’t even have to use their hardware to stake their tokens – thus creating a better blockchain for the environment.
The actual purpose of cryptocurrency was to provide decentralization for financial purposes. And though Bitcoin PoW did it very well up till an extent, its hardware centralization has come to defeat the very purpose.
Because the algorithm is not reliant on heavy computation, it provides better decentralization in terms of participating machines as being part of consensus is no longer about having machines which can’t be afforded by others or where nodes have no option but to be part of mining pools.
Instead, PoS relies upon the size of stake to get selected as the validators. Even with the stakers joining the staking pool in case PoS, it does not cause centralization as such because their stake remains in their wallet hence not allowing the chance of stakes to gather at one place.
With easy participation in consensus without having to host a node of your own, one can easily participate in the network and reap the benefits that were only limited to ones who understood how to participate in mining. This promotes decentralization in the network by a substantial amount.
Future Proof Security
While 51% attacks are becoming quite dangerous with increasing centralization concerns, PoS helps in mitigating this by removing hash rates as part of the equation altogether. To perform a 51% attack on PoS one would be required to gather 51% of tokens in the network. This is much harder as it would require convincing a large number of parties to aggregate the sums to perform the attack.
The staking and validating pools don’t help contributing this either as the stakes as mentioned before stay in their owner’s wallet. And ease of participation makes it come closer to impossible as decentralization increases more and more.
While Bitcoin originally was intended to serve a great number of financial use cases, its speed of transactions, fees and confirmation time make it a lot harder to scale it to serve millions or billions of users.
PoS allows lowering the block wait time, which increases the number of throughput of transactions as well as their observed confirmation time
The impact on the environment is a very important factor for a technology. This was made clear when so many papers and data sources came out estimating Bitcoin’s impact on the environment. While many of these data sources are questionable, it is assumed that the currency consumes electricity that can PoWer many of the small nations out there.
Even if the electricity becomes more affordable, less impacting on the environment, it still won’t make a difference as long as the profiteering relies upon computation itself. PoS minimizes the monetization on the hardware and electricity and allows greater participation for everyone