Every day more and more crypto-projects declare that they work on the basis of POS (proof of share), despite the existence of other methods of protection: POW (proof of work) or hybrid technologies. Our OctoinCoin crypto currency is also based on this algorithm and from this article you will learn what is so good about the POS protocol, and why its popularity holds positions.
Firstly, it can be assumed, its popularity is only in the so-called "lazy" Mining (forging or minting). Thanks to the concept of protocol you buy cryptocurrency, which has produced new coins just because you already have a digital money in your wallet. This means that the greater the crypto currency of the miner, the higher its chances of getting a reward for the new block.
Forging is a way to create new POS-based units (confirmation of ownership/stake), in which coin holders receive a commission from transactions. In order to start mining, the user needs to install a purse on the computer, to replenish his balance with coins. Then the purse is synchronized with the network, the user gets information about all previous transactions and becomes another decentralized database (Node).
Depending on the specifics of a particular cryptocurrency, purse holder receives a bonus. Of course, everywhere there are nuances, and some crypto-currencies can have special conditions in forging. For example, such as a coin Emercoin requires participants to freeze assets not less than 30 days. In this case, the remuneration is similar to the accrual of interest on the deposit. On the example of OctoinCoin - the freezing of the user's assets is not foreseen at all, and the reward for creating a block when it is credited to the wallet has a technical pause of only 24 hours.
But, the main goal of the Proof-of-stake protocol is still protection! So, back to the origins. Initially, POS was introduced in 2011 as a method of defense against various attacks, such as: 51% attack, race attack, Finn attack, etc., before which POW was vulnerable. While developing OctoinCoin, we carefully analyzed all such cases.
At the beginning of its existence, bitcoin, like many other crypto-currencies, was weak before the "51% attack", which occurs if one user owns more than half of all computer capacities on the network. In this case, he has the opportunity to confirm only his blocks, ignoring others. This allows him to receive 100% of all generated bitcoins and block any transactions. The result - the attacker rewrites the entire history of block generation, having chosen a reference point in the past, overtakes the current chain of blockage, its version becomes true, and coins from other users' wallets disappear for a long period.
The POS method does not depend on computing power, and it is immune to such attacks for the following reasons:
To start monitoring the network, the miner must take more than half of the total currency mass of the entire network, which is very expensive.
The attacker will suffer the most, as he steals the reward from himself.
Conclusion: regardless of the various features, the method of mining using the POS protocol is attractive for users who do not want to solve complex problems and surround themselves with expensive equipment, and the method itself remains safe and energy-saving. That is why our company Octoin decided to stay at the POS algorithm, in order to protect and further increase the contributions of our investors.
A series of our teaching articles will be complemented and continued. Next time, you will learn about what is a node and masternode, about their differences and purpose.
Octoin - We do not work for money. We make money work for us!