Fast Forward: Disruptive Technologies
Why Proof of Stake is Superior | 4 Reasons
All consensus mechanisms are not created equal, and In this video, we will make a case for the superiority of the proof of stake system. This is a follow-up to our previous video explaining the difference between proof of work and proof of stake.
In this segment, we describe how proof of stake coins like Cardano, Tron, EOS, Tezos are better than proof of work coins in terms of transaction speed, environmental impact, accessibility, and security.
Proof of stake lifts the massive energy requirement from the network. One of the most limiting aspects of the proof of work mechanism is the energy consumed to run power-hungry mining rigs. Energy consumption associated with bitcoin equals out to around 130tWh per year according to the University of Cambridge. This is comparable to the whole of Ukraine or Argentina.
Speed is an important factor when considering the actual real-world viability of a coin. If a blockchain-based currency is going to support a future payment infrastructure, it needs to be able to handle a massive number of transactions reliably and cost-effectively. When using bitcoin in the real world, it is just too slow and much more difficult to liquidate for cash than a simple visa swipe or cash transaction. In addition, processing fees and price volatility can become very burdensome when managing many transactions.
More than 50% of the total bitcoin mining power is controlled by only 4 mining pools (most are coming out of china). This unfair system severely disadvantages smaller miners. If the miner is not able to compete in terms of computing power, they have no chance of winning.
The chance of someone fooling the network in a proof of stake system is possible but almost completely improbable. For someone to attack a proof of stake coin to this scale, the hacker would need to stake at least 51% of that cryptocurrency’s total available float. They would then need to go out into the open market and purchase more of that coin until they own 51% or more. This would drive the price up to the point where it would not make financial sense because the cost would be greater than the potential benefit of controlling the network.
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⏱ TIMESTAMPS
00:00 – Introduction
00:11 – Fewer Energy Requirements
01:48 – Faster Transactions
03:28 – Democratised and Accessible
04:38 – Improved Security
06:15 – Wrapping Up
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