There has been an increasing number of 51% attacks on proof-of-work (PoW) based cryptocurrency networks. In these types of attacks, a malicious entity is able to gain control of the majority (51% or greater) of a digital currency’s hashrate and can then potentially begin to engage in double spending. This occurs when the attacker spends the same funds on more than one occasion.
51% Attacks On Major Cryptocurrency Networks
On January 5th, 2019, the San Francisco-based crypto exchange, Coinbase, detected a “deep chain reorganization” of the Ethereum Classic (ETC) blockchain. The leading US-based digital currency trading platform was forced to halt deposits and withdrawals due to “double spends, totaling 88,500 ETC”, an amount valued at approximately $460,000 at the time of the incident.
On January 10th, 2019, a Reddit user named /taipalag posted a warning message claiming that a single entity was in control of over 51% of digital currency Dash’s (DASH) hashrate. The Redditor shared several DASH addresses (as detailed in his post) which appeared to be controlled by one person or a certain group of users. He wrote that these few addresses alone had been controlling well over 53% of the crypto’s hashrate.
Notably, Dash and Ethereum Classic are both top 20 cryptocurrencies in terms of market capitalization. Although the developers of both these popular digital currencies claim they have things under control and will be working towards improving the security of their blockchains, we must take a step back and try to objectively evaluate these incidents.
Will This Be The Year Of Proof-of-Stake Coins?
While Bitcoin maximalists and many other prominent crypto analysts claim that proof-of-work is the most secure protocol for reaching distributed consensus, it’s possible that more users this year will begin to invest in proof-of-stake (PoS) based digital assets.
Proponents of PoS argue that if block validators (called forgers) stake their cryptocurrency holdings, then they will be incentivized to accurately and efficiently verify transactions. That’s because they risk losing their staked amount if they act dishonestly. Those who support proof-of-stake also claim that it offers a greater level of security when compared to PoW.
In this article, we shall look at three different PoS-based cryptocurrency platforms that continue to release upgrades and appear to be developing solutions that are in high demand. These include Ark (ARK), Stratis (STRAT), and PIVX.
Ark: “All-In-One” Blockchain Solutions Platform
Ark (ARK) is an “all-in-one” blockchain solutions platform that aims to “provide users, developers, and startups with innovative” distributed ledger technology (DLT)-enabled software.
According to Ark’s official website, its developers plan to “create an entire ecosystem of linked chains and a virtual spiderweb of endless use-cases.”
Similar to Lisk, Ark uses the delegated proof-of-stake (DPoS) consensus protocol to manage its blockchain network. ARK token holders can vote for 51 delegates (transaction validators) who may be chosen to forge new blocks on the platform’s network. Delegates are compensated for validating transactions, and they can then choose to distribute these rewards to the users that may have voted for them.
Proof-of-stake coins such as Ark are preferred by some investors because they can be used to earn a passive income. While most PoS tokens require that users leave their wallets online, Ark holders can earn passive interest on their tokens even when they’re offline. One of the only requirements for receiving rewards for Ark holders is that they must vote for delegates. All Ark token investors that cast their votes will receive payouts on their staked amount.
Ark tokens can also be stored on hardware wallets including the Ledger Nano S and users can vote directly from the device, without having to bring their staked tokens online.
Stratis (STRAT): Write Smart Contracts Using C#
Another PoS-based token project called Stratis (STRAT) also seems to have an active development team, as there have recently been many different updates released for the network. As mentioned on its official website, Stratis is a blockchain-based platform designed specifically for businesses.
Stratis’ proprietary software can be used by corporations to develop decentralized applications (dApps). The Stratis platform allows users to deploy their own blockchain-enabled solutions using C#. Certain programs can also be developed using sidechains, in order to reduce transaction processing times.
When first launched, Stratis was a PoW-based coin, however, it has now switched over to a PoS consensus protocol. To stake coins on its network, users must have a copy of the Stratis Staking Wallet Client and maintain a connection to the internet. Stratis token holders who stake their holdings earn a payout of 0.5-1% per year.
While this payout amount is considerably lower than what’s offered by proof-of-stake coins, the Stratis platform is backed by Microsoft and recently released smart contract support in C#, along with many other recent network upgrades. Stratis also has a very active social media presence and a fairly large community. Investing in this project might pay off in the long-term, however, it’s always recommended that investors do their own research.
PIVX: Based On Zero-Knowledge Cryptography
PIVX, which stands for Private Instant Verified Transaction, is an MIT-licensed open-source blockchain-enabled digital currency. PIVX’s developers aim to create a decentralized platform that can process transactions quickly and for “low fees.” Based on zero-knowledge cryptography, the PIVX network maintains the financial privacy of its users.
Although PIVX started as a fork of Dash, it has updated its network and currently uses the proof-of-stake protocol. Users can start staking PIVX after downloading its official wallet, adding PIVX tokens to their account, and staying connected to the internet.
Those who stake PIVX tokens can expect to earn between 5-10% in rewards. The PIVX earnings calculator can be used by token holders to determine exactly how much they can earn from staking. To learn more about the staking process on the PIVX platform, click here.
Will More Investors Turn To Proof-of-Stake Coins?
As mentioned, there have been many security-related issues with PoW coins and mining has become centralized, with only a few mining pools controlling large amounts of hashpower. Meanwhile, PoS coins are considered more eco-friendly because maintaining their networks does not require as much electricity.
But does this mean that proof-of-stake is a better consensus protocol when compared to PoW? In future posts, we shall examine a few PoW coins and try to determine whether their networks are properly secured.
Which is your favorite proof-of-stake project? Let us know!
What is the best Proof-of-Stake blockchain?
— Crypto Insider (@CryptoInsiderHQ) January 17, 2019
Crypto Insider is in no way affiliated with or paid to promote the aforementioned projects.
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