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Proof of Work Vs Proof of Stake, Explained.

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The proof of work and proof of stake consensus mechanisms. Let's understand the basic differences and similarities between the two of them.

Understanding the consensus mechanism of Proof of Work Vs Proof of Stake in the Blockchain Technology.

  • Intro

The Cryptocurrencies along with the Blockchain Technology is most famous for the high-class security that it provides. It is estimated by professionals that, for a hacker, it is easier to break into a Centralised Financial Reserve and rob the funds than to take control of the Bitcoin Blockchain network.

 

  • Security through Consensus

This high-security attribute is obtained through something known as Distributed Ledger Technology and the Consensus mechanism. As the data is distributed among the nodes in the network, the same copy of data is available to everyone, hence tampering the data in some of the nodes will not affect the information on the Blockchain but would be considered as invalid by the majority of the nodes. This consensus of coming to a common point that a set of particular nodes have been tampered with is what that provides Blockchain Technology with its security.

 

  • Why is Consensus required?

Generally, a consensus is important as it results in impartial benefit for each and everyone, although the decision might not seem to be going hand in hand with each individual’s interest but is the best solution for the overall development of everyone. A number of consensus mechanism have been developed through a number of cryptocurrencies but two of the most popular one is the proof of work and proof of stake consensus mechanisms. Hence one must know the basic differences and similarities between the Proof of Work and Proof of Stake.

Proof of Work

The Cryptocurrency Miners, mine the blocks and then present it to the network so that it is added to the network and they receive a Block reward. But the blocks are attached to complex mathematical problems which are highly difficult to solve and uses brute force computations in order to solve them. With time, as the network and the number of miners increases, the difficulty of solving the problems increases too.

 

A block is then checked for its validity through the proof of work consensus mechanism and if it is found to be invalid by more than half of the members in the network then the block is discarded. Nevertheless, if the hackers gain access to more than 50% of the total network then she/he can manipulate the behaviour and can confirm an invalid block to be valid and hence a tampered block is added to the Blockchain.

 

In order to avoid this problem, the network size comes into picture which is huge in this case, and is growing day by day, hence gaining control over the members spread throughout the world at such massive scales is near to, but not impossible. It is worth mentioning that, in order to maintain the time taken for the creation of a new block, the difficulty level is automatically incremented.

 

For a real-time instance, if the network automatically observes that the time taken to add a block on to Bitcoin blockchain network is lesser than 10 minutes then the difficulty is automatically increased so as to compensate the time required for the addition of new block. Basically in this concept, the profitability of mining a block, depends on the amount of work done by the minor hence the name ‘proof of work’.

 

Proof of Stake

Even in this consensus mechanism aims at the verification and the addition of a new block to the Blockchain network but considering the amount of money a particular user stakes on a block. Hence the user who possesses the highest amount of stake is more likely to become the next block validator. This method is considered to be far more efficient than the proof of work mechanism but it is not being used that widely.

 

The Proof of Stake mechanism is considered to be eco-friendly as it does not require huge amounts of energy consumption and is also healthy for the network’s development too. One of the key features in the Proof of Stake consensus mechanism is that all the coins in the network are pre-mined. There is no creation of new coins and hence the minors are rewarded with the complete transaction fees of the transactions they verify.

 

  • Remarks

Forking a particular Blockchain is not good for the development of a network, intense experimentations were done by the researchers on the proof of work mechanism which led to the conclusion, that it restricts the forking process which in turn leads to an instability in the network, as the miners would have to distribute the computation power between the old and the new Blockchain. When compared to the proof of the Stake mechanism, as it does not require Brute Force power, forking a particular network doesn’t affect the consensus mechanism at all.

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#Blockchain

Adoption: Courts in France adopt blockchain technology

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The NCC or National Council of Clerks of France have finally tested a blockchain technology-based solution for the courts of the country.

The NCC or National Council of Clerks of France recently made an announcement that they have finally tested a blockchain technology-based solution for the courts and are now prepared to launch it throughout France. The National Council of Clerks is a representation of the clerks of the corporate and commercial registry in around a hundred thirty-hour workplaces in France. The workplaces depend upon one another for sharing important data.

 

The goal of NCC France

The NCC is determined to streamline and position the latest information technology that capitulates something that is known as ‘the single version of the truth’. The data tracks an organization’s growth, dissolution, change of location etc. The sharing of data amongst each other was earlier a big challenge for the NCC.

 

The project based on blockchain technology had an aim of rapid cycle times and precision of information. In the pilot phase of the project, the National Council of Clerks in France was able to lessen the timing of registry operation involving a lot of days to just one day.

 

According to the president of France National Council of Clerks, Sophie Jonval, the project based on blockchain technology is an outcome of the partnership with IBM. IBM who is already an expert in blockchain technology and cryptography has been serving as a technological partner.

 

According to the NCC, the project shall be rolled out in the 1st half of 2019 and the project shall ensure a transparent and improved dynamics of the interactions between the clerks.

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#Blockchain

HSBC Bank Looking to Expand Blockchain Platform Voltron in South Korea

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HSBC, the largest bank in Europe is searching for banks in South Korea for launching Voltron, it's blockchain platform as reported by the Korean Times.

HSBC, the largest bank in Europe is searching for banks in South Korea for launching Voltron, it’s blockchain platform as reported by the Korean Times.

 

HSBC Voltron:

The Voltron platform delivers a more quick method to process and settle invoices using by using permissioned blockchain technology. The permissioned blockchain stops the transactional data from being shared with everyone but instead, the data is shared with only consented users. The platform decreases the time that is usually required for the total process.

 

According to Joshua Kroeker, the innovation director of HSBC, the platform would mostly impact the process timing. Thus the transparency which comes with blockchain, as well as the rapid flow, would help the banks in managing their working capital as well as their cash flows. Kroeker reached out to the banks in South Korea to partner with their blockchain platform i.e. Voltron for the letters of credit.

 

HSBC’s blockchain platform was initiated in 2018 and is currently partnered with seven banks namely Standard Chartered, Bangkok Bank, BNP Paribas, ING, CTBC Holding, SEB, and NatWest. The platform is still in its pilot stage however, it shall soon be launched commercially.

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World’s biggest Blockchain ETF on London Stock Exchange

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The world's biggest blockchain ETF is scheduled to be launched by Invesco on the London Stock Exchange by Invesco, a large investment management company.

Cryptocurrency enthusiasts around the world have been curiously waiting for a bitcoin ETF to be approved by the SEC or any other potential government in the world. However, before a bitcoin ETF, the world’s biggest blockchain ETF is scheduled to be launched by Invesco on the London Stock Exchange. Invesco is a large investment management company that has more than $800 billion in assets under management.

 

World’s biggest Blockchain ETF

At the launch, the Blockchain ETF will invest in a portfolio of forty-eight companies including the CME Group, a US exchange which had earlier launched bitcoin futures on the exchange and Taiwan Semiconductor Manufacturing, a company that supplies crypto mining machines. Other companies are those that have an exposer to the blockchain technology.

 

The Blockchain ETF will be based on a proprietary scoring system made by Elwwod Asset Management LLP. According to Bin Ren, the chief executive officer at Elwood, the blockchain goes past cryptocurrencies. He mentioned that although blockchain technology is mostly being used by financial companies, it will be implemented in a vast range of industries soon.

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