https://noqreport.com/2022/03/23/not-every-crypto-is-decentralized-proof-of-work-vs-proof-of-stake/

Cryptocurrencies operate differently than the money that we are used to. Because they are solely electronic, there is no physical currency to trade. Instead, each network creates a record or “blockchain” of every transaction that takes place on the network.

There are currently two main types of mechanisms used to verify transactions on the network: Proof-of-Work (PoW) and Proof-of-Stake (PoS). While the industry was founded on PoW, many networks are moving to PoS. The MIT Technology Review dubbed PoS one of the top ten breakthrough technologies of 2022, while the European Union almost banned PoW.

Consensus Mechanisms

A “consensus mechanism” is the process of validating transactions across many nodes of the network. Consensus mechanisms are necessary for cryptocurrency networks to maintain the accuracy and validity of their blockchains, or ledgers. Since no central authority controls the ledger, a consensus of the majority of the network verifies each transaction to make sure it does not contain incorrect or fraudulent transactions.

With a centralized payment network such as PayPal or Venmo, verification is easy. A single authority controls the ledger and acts as a trusted party to verify or clear the transactions. An individual cannot “double-spend” on these networks.

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On a cryptocurrency network, however, because of the ease with which a digital currency can be reproduced without a central authority verifying transactions, an individual could attempt to sneak duplicate transactions into the blockchain before the next block is added.

Proof-of-Work

PoW was implemented in 2009 by Satoshi Nakamoto as the consensus mechanism for Bitcoin, the original cryptocurrency network. The Bitcoin network continues to operate using PoW.

So how does Proof-of-Work work? When someone wants to transfer funds from one bitcoin address to another, he announces the transaction to the network by signing it with his private key and sending it to the recipient address via its public key. The transaction is bundled with other recent transactions into a block that is added roughly every ten minutes to the Bitcoin blockchain.

The blocks are created through “mining.” For each block, Bitcoin miners (computers) compete to solve a cryptographic puzzle, using processing power, which requires a significant amount of electricity. Once the first miner solves the problem, a block of verified transactions is added to the chain, and they become part of the permanent record. In exchange for their work, the miner receives a reward in bitcoin.

Mining is “the work” in the term “Proof-of-Work.” Miners use their computing power, or “work” to “prove” the network. Because the network creates a permanent record of verified transactions, PoW eliminates the need for a central authority.

Proof-of-Stake

Proof-of-Stake emerged in 2013 as an alternative to PoW. It is used by networks such as Cardano and Solana. The Ethereum network plans to switch from PoW to PoS in the future, and its creator, Vitalik Buterin, is a major proponent of PoS as a consensus mechanism.

Whereas PoW relies on the work put in by miners to create the longest blockchain, PoS involves network participants “staking,” or locking up their crypto assets, in exchange for becoming validators of the blockchain. Validators are randomly selected by the network to verify the blockchain. PoS validators are similar to PoW miners, but instead of work, their “stake” allows them to validate the network. As Campbell Harvey states in DeFi and the Future of Finance,

Validators make themselves available by staking their cryptocurrency and then they are randomly selected to propose a block. The proposed block needs to be attested by a majority of the other validators. Validators profit by both proposing a block as well as attesting to the validity of others’ proposed blocks.

PoS uses a process of “slashing” that can be used to penalize bad actors. If a validator proposes or validates bad blocks, or is inactive on the network and doesn’t sign transactions, they can have their stake “slashed.” Slashing helps the PoS network discourage downtime and double signing, both of which are harmful to the network.

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Tradeoffs Between PoW and PoS

PoS networks don’t require anywhere near the same amount of energy as a PoW network because they don’t involve thousands of specialized computers churning away simultaneously, consuming significant electricity, “working” to solve a cryptographic puzzle. The significantly lower amount of energy required by PoS to achieve consensus is viewed by many as a positive feature of the protocol. Further, because PoS networks do not require many computers “working” to achieve consensus, they potentially exhibit increased throughput, or the ability to process transactions faster.

That said, there are significant drawbacks to PoS. Cryptocurrencies are, on the whole, presented to the public as “decentralized,” but networks using PoS consensus mechanisms are drawn into a process that moves away from any meaningful decentralization. As Lyn Alden elaborates,

With a proof-of-stake system, the more coins you have, the more voting power you have, and those with the coins are also the ones earning the new coins from staking. Since they don’t need to expend resources to stake, they can simply increase their overall staking amount as they earn ongoing coins from staking rewards, and exponentially grow their influence on the network over time, forever. Network dominance tends to lead to more network dominance, in other words.

The governance of PoS networks, therefore, becomes more like that of a centralized corporation than a decentralized cryptocurrency. And with respect to monetary networks, a corporate board of unelected officials is arguably similar to the fiat system we already have.

Further, PoS networks face technical challenges that PoW networks do not. PoS algorithms involve hundreds of thousands of lines of code, while the PoW algorithm can be created with a few hundred lines of code.

As a more concrete example, the Solana network routinely suffers from partial outages, recently for a full 48 hours, due to “excessive duplicate transactions.” This problem arises because one essentially needs a data center to run a Solana validator, which gives the network higher throughput but sacrifices decentralization and security. While networks prioritizing throughput is not inherent to PoS, PoS networks use high throughput as a way to distinguish themselves from their competitors (Solana vs. Cardano). This leads PoS networks to value throughput over decentralization and security.

The Future of Consensus Mechanisms

Current cryptocurrency adoption rates outpace early adoption rates of the internet. “Crypto” is here to stay; it will be intricately linked to the future of money and financial markets.

PoW uses more energy than PoS, but it’s battle-tested, decentralized, and secure. Policymakers seeking to ban PoW, or thinking it can be easily replaced by PoS would do well to keep the inherent and important tradeoffs between the two consensus mechanisms in mind.

Levels of decentralization and trust vary across cryptocurrency networks, and different networks serve different purposes for consumers. The choice of consensus mechanism between PoW and PoS is a key determinant of the decentralization, efficiency, and security of the cryptocurrency network.

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About the Author

David Waugh joined AIER in 2020 and currently works as the Managing Editor. He is a Don Lavoie Fellow with the Mercatus Center and he previously worked as an associate for S&P Global Market Intelligence.

David is a graduate of Hampden-Sydney College where he received a BA in Economics. While at Hampden-Sydney, he was a Senior Fellow with the Center for the Study of Political Economy and worked in the Economics department as a teaching assistant.

Image by Sergei Tokmakov Terms.Law from Pixabay. Article cross-posted from AIER.

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Big Pharma’s Five Major Minions that Everyone, Vaxxed or Unvaxxed, Must Oppose

This is not an “anti-vaxxer” article, per se. It’s a call for everyone to wake up to the nefarious motives behind vaccine mandates, booster shots, and condemnation of freedom.

The worst kept secret in world history SHOULD be that the unquenchable push for universal vaccinations against Covid-19 has little if anything to do with healthcare and everything to do with Big Pharma’s influence over the narrative. Unfortunately, that secret has stayed firmly hidden from the vast majority of people because of the five major minions working on behalf of Big Pharma.

What’s even worse is the fact that Big Pharma’s greed is merely a smokescreen to hide an even darker secret. We’ll tackle that later. First, let’s look at the public-facing ringleaders behind the vaccine push, namely Big Pharma. But before we get into their five major minions, it’s important to understand one thing. This is NOT just an article that speaks to the unvaccinated. Even those who believe in the safety and effectiveness of the vaccines must be made aware of agenda that’s at play.

Let’s start with some facts. The unvaccinated do NOT spread Covid-19 more rampantly than the vaccinated. Even Anthony Fauci acknowledged the viral load present in vaccinated people is just as high as in the unvaccinated. This fact alone should demolish the vaccine mandates as it demonstrates they have absolutely no effect on the spread of the disease. But wait! There’s definitely more.

This unhinged push to vaccinate everyone defies science. Those with natural immunity may actually have their stronger defenses against Covid-19 hampered by the introduction of the injections which fool the body into creating less-effective antibodies. Moreover, the push to vaccinate young people is completely bonkers. The recovery rate for those under the age of 20 is astronomical. Children neither contract, spread, nor succumb to Covid-19 in a statistically meaningful way. What they DO succumb to more often than Covid-19 are the adverse reactions to the vaccines, particularly boys.

All of this is known and accepted by the medical community, yet most Americans are still following the vaccinate-everybody script. It requires pure cognitive dissonance and an overabundant need for confirmation bias to make doctors and scientists willingly go along with the program. Yet, here we are and that should tell you something.

Before I get to the five major minions of of Big Pharma, I must make the plea for help. Between cancel culture, lockdowns, and diminishing ad revenue, we need financial assistance in order to continue to spread the truth. We ask all who have the means, please donate through our GivingFuel page or via PayPal. Your generosity is what keeps these sites running and allows us to expand our reach so the truth can get to the masses. We’ve had great success in growing but we know we can do more with your assistance.

Who does Big Pharma control? It starts with the obvious people, the ones who most Americans believe are actually behind this push. Our governments at all levels as well as governments around the world are not working with Big Pharma. They are working for Big Pharma. Some are proactive as direct recipients of cash. Others may oppose Big Pharma in spirit but would never speak out because they know anyone who does has no future in DC.

This may come as a shock to some, but it’s Big Pharma that drives the narrative and sets the agenda for the “experts” at the CDC, FDA, WHO, NIH, NIAID, and even non-medical government organizations.

Most believe it’s the other way around. They think that Big Pharma is beholden to the FDA for approval, but that’s not exactly the case. They need approval for a majority of their projects, but when it comes to the important ones such as the Covid injections, Big Pharma is calling the shots. They have the right people in the right places to push their machinations forward.

That’s not to say that everyone at the FDA is in on it. Big Pharma only needs a handful of friendlies planted in leadership in order to have their big wishes met. We have seen people quitting the FDA in recent weeks for this very reason. The same can be said about the other three- and five-letter agencies. Too many people in leadership have been bribed, bullied, or blackmailed into becoming occasional shills for the various Big Pharma corporations. Some have even been directly planted by Big Pharma. That’s the politics of healthcare and science that drives such things as Covid-19 “vaccines.”

Read the rest of this story, but please be sure to donate first if you can.


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