#Staking will drop power consumption update#

It’s a proven, robust way of maintaining a secure decentralized blockchain. Proof of work has some powerful advantages, especially for a relatively simple but hugely valuable cryptocurrency like Bitcoin ( learn more about how Bitcoin works).

#Staking will drop power consumption update#

The winner gets to update the blockchain with the latest verified transactions and is rewarded by the network with a predetermined amount of crypto. Proof-of-work blockchains are secured and verified by virtual miners around the world racing to be the first to solve a math puzzle. The reason it’s called “proof of work” is because the network requires a huge amount of processing power. Proof of work and mining are closely related ideas.

Proof of work is the original crypto consensus mechanism, first used by Bitcoin. To understand proof of stake, it’s helpful to first understand proof of work, so we’ve paired them in this explainer. The newer consensus mechanism is called proof of stake, and it powers Ethereum 2.0, Cardano, Tezos and other (generally newer) cryptocurrencies. Proof of work is the older of the two, used by Bitcoin, Ethereum 1.0, and many others. There are two major consensus mechanisms used by most cryptocurrencies today. To accomplish this, networks use something called a “consensus mechanism,” which is a system that allows all the computers in a crypto network to agree about which transactions are legitimate. Proof of stake - which is employed by Cardano, the ETH2 blockchain, and others - uses staking to achieve the same things.ĭecentralized cryptocurrency networks need to make sure that nobody spends the same money twice without a central authority like Visa or PayPal in the middle. Proof of work, first pioneered by Bitcoin, uses mining to achieve those goals. “Proof of work” and “proof of stake” are the two major consensus mechanisms cryptocurrencies use to verify new transactions, add them to the blockchain, and create new tokens.