Cryptocurrency is based on blockchain networks that are decentralized and require a verification system to function. But not all coins work on the same system.
In order to verify transactions without a central system, cryptocurrency networks use a so-called “consensus mechanism”.
Proof-of-Work (PoW) and Proof-of-Stake (PoS) are the two main consensus mechanisms used today.
The blockchain has no central authority, so protecting digital assets from fraud and securing the blockchain is left to the developers. Both PoS and PoW systems reward miners financially with coins and prevent double spending.
What is Proof-of-Work (PoW)?
Proof-of-Work (PoW) is the older of the two mechanisms. It’s called proof-of-work because transactions are validated by miners who solve complicated math problems in exchange for cryptocurrency. Tremendous computing power is required for the network to be able to validate many transactions quickly.
Cryptocurrencies like ether (CCC:ETH-USD) and Bitcoin (CCC:BTC-USD) are still running on proof of work. Proponents like PoW because the computing power that comes with it makes it nearly impossible for others to break into its blockchain.
On the other hand, critics argue that PoW uses too much electricity. Bitcoin currently consumes 130 TWh annually. If Bitcoin were a country, it would use more electricity than all of Ukraine. Ethereum now consumes as much electricity as the nation of Ecuador.
What is Proof-of-Stake (PoS)?
Since the cryptocurrency has no central authority, the proof of work relies on rewarding the miners for the computing power they dedicate to the network. However, this does not exactly reflect how many coins the miners actually own. Enter a proof-of-stake that rewards miners based on how many coins they actually have in their portfolio.
Proof-of-Stake (PoS) reduces the computing power required for verification and at the same time ensures a higher transaction speed. Since miners must have collateral in order to participate, the cases for attacks are limited. Miners are now validators of new transactions and blockchain updaters. The PoS system is based on rewarding the most invested miners, not those who use the most electricity.
So what’s better, the old PoW system where miners compete mathematically for coins or the new PoS system where miners are actually involved in the process? It all comes down to the goal for a particular blockchain.
PoS uses less power and offers greater rewards for nodes, but it is also more centralized and less secure, which means it is easier to attack. PoW is more decentralized and safer, but with enormous environmental costs.
PoS also offers more opportunities to punish bad miners. While it’s more decentralized, it’s much more secure in some ways. PoS also leaves a much smaller environmental footprint.
Here are 5 Great PoS-Based Coins To See In 2021:
- Privately verified instant transaction (CCC:PIVX-USD)
- Neblio (CCC:NEBL-USD)
- Qtum (CCC:QTUM-USD)
- Navcoin (CCC:NAV USD)
- Stratis (CCC:STRAX-USD)
Cryptocurrency investors trying to invest in the future need PoS-based tokens in their portfolio, there are no two options. Interested investors should also pay attention to these The best altcoins for 2021that almost all use PoS consensus.
Proof-of-Stake Cryptocurrencies for Sale: Private Verified Instant Transaction (PIVX-USD)
Source: Shutterstock
Estimated Annual Return: 4.8%
Private Verified Instant Transaction is a PoS crypto that focuses on making transactions both secure and private. Users can wager coins with respectable returns on the blockchain. A great feature of PIVX-USD is that there is no upper limit, which makes a low barrier perfect for newbies. Miners achieve an annual return of 5% by running masternodes of 10,000 PIVX USD units.
PIVX-USD traded from $ 0.17 in-game in 2017 to $ 9.43 in January 2018 and has leveled off over the past few years. The altcoin is back on the move in 2021, rising from $ 0.47 in January to $ 2.02 since April. PIVX-USD is down to $ 0.70 in June and seems due for another spike. If it even approaches its 2018 high, this cryptocurrency will be a great investment for 2021.
Neblio (NEBL-USD)
Source: Shutterstock
Estimated Annual Return: 10%
Neblio is a next generation blockchain that uses a PoS consensus mechanism to secure its blockchain and DLT database. No minimum balance is required.
Neblio was founded in 2017 to advance blockchain technology and meet the need for clear solutions and innovative tools. It runs on open source and a token protocol (NTP1). NTP1 simplifies the application and development of applications for supply chain and records management, gaming, asset tracking and identity management.
NEBL started trading in late December 2017 and quickly rose to $ 44.47 in January 2018. After 2 retracements and rallies, the altcoin leveled off until January 2021. From its low of $ 0.39 on December 25, 2020, the value slowly rose to $ 4.51 on April 12. After another retracement and recovery in May, the NEBL-USD leveled off at USD 1.35 in June. Looking at the 2021 chart, NEBL-USD may need to correct and rebound to previous levels.
Qtum (QTUM-USD)
Source: Shutterstock
Estimated Annual Return: 8th%
Qtum is an open source blockchain altcoin. Because it is decentralized, QTUM-USD can execute smart contracts on a variety of machines, which means that Qtum can fulfill multiple contracts at the same time.
Qtum works in a decentralized PoS network. The secure and stable system makes it compatible with the existing blockchain infrastructure. New technologies can be added to the system simply by contract coding and deployment.
The trading data for QTUM-USD is very similar to that of NEBL-USD. QTUM-USD was launched in 2017 and quickly rose to over $ 85 in January 2018. After several retracements and rallies, price levels dropped in the $ 1.60 to $ 4 range through May 2021, when Qtum peaked at over $ 23. If history is any indicator of this, QTUM-USD could drop back to the $ 7 mark in June and hit higher levels again in 2021.
Navcoin (NAV-USD)
Source: Shutterstock
Estimated Annual Return: 5%
Navcoin, “The Unbreakable Code”, is applying as the first crypto currency with a dual blockchain, which makes a break-in practically impossible. Dual or double entry blockchain works in such a way that the buyer offers real assets and the seller offers native tokens in return.
Navcoin offers smooth payments, full decentralization, and fully autonomous funding, which makes cryptocurrency very easy for newbies to use.
NAV-USD really rose in 2017 as it rose from $ 0.06 to $ 4.16 by January 2018. After two retracements and rallies, Navcoin settled in the $ 0.10 range through January 2021, when it began a steady rise to $ 0.71 in February and then to $ 1.17 in March. If held in the $ 0.30-0.40 range through May and June, phase 3 accumulation and rebound could bring NAV-USD back to previous levels by 2021.
Stratis (STRAX-USD)
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Stratis prides itself on its ability to reduce the need for trust in cryptocurrencies by increasing transparency and streamlining business processes. The Stratis token, STRAX-USD, transfers the value on the Stratis marketplace.
When Stratis was first introduced, it used a modified blockchain based on the Bitcoin proof-of-work model. Stratis has advanced to the PoS through innovation and new technologies. The new STRAX USD blockchain provides an environment for rapid growth.
Like so many of his crypto colleagues, 2017 and 2018 were banner years for STRAX-USD. Altcoin prices rose from below $ 0.10 to highs of $ 9 in 2017 and $ 21 in 2018. After two major retracement and recovery periods in 2018, STRAX-USD hovered in the range of $ 0.30 to 0 .60 USD by 2021, where it peaked at over USD 3. A retracement in June could result in a correction and a return to previous levels.
When it comes to PoW vs. PoS, it really depends on which warehouse you’re in. Many still like to trade coins the old proof-of-work way, like Bitcoin. Others prefer the newer, more user-invested method of Proof of commitment, like Navcoin and Qtum.
While PoW rewards miners with computing power, PoS places more value on miners who have already invested in the coins. PoS enables much higher transaction speeds and uses only a fraction of the same energy that is needed to run the network.
At the time of this writing, Philip Loyd held positions (neither directly nor indirectly) in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Publishing guidelines.
This article is for informational purposes only. Reporting in this article should not be construed as an offer or solicitation to buy or sell any security. The author of this article has no position in the above securities and does not plan to do so in the future. The author has not been compensated for this article with securities of any kind.
