Tag: POS

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Cryptocurrencies

5 Best Staking Coins in 2020: Checking Out Number 4

Investors stake their cryptocurrencies by locking their assets for the reward incentives. Staking is similar to saving in banks because users lock their money in preferred financial services, but crypto staking earns higher ROI than fiat savings in banks. 

Investors stake their cryptocurrencies by locking their assets for the reward incentives. Staking is similar to saving in banks because users lock their money in preferred financial services, but crypto staking earns higher ROI than fiat savings in banks. 

Investors stake their cryptocurrencies by locking their assets for the reward incentives. Staking is similar to saving in banks because users lock their money in preferred financial services, but crypto staking earns higher ROI than fiat savings in banks. 

Staking is an innovation that allows users to reap maximum gains from their digital investments. Users can earn passively when their nodes validate and add blocks to blockchain networks.

Staking coins utilize a special, more user-friendly blockchain consensus for mining cryptocurrencies called Proof of Stake. In this article, we take a look at five of the best staking coins in 2020 you need to check out. But first, let’s get into the nitty-gritty details of the mining consensus. 

Proof of Stake vs. Proof of Work

Traditional Proof of Work (PoW) validates blocks of transaction information via complex cryptographic computing that generates consensus. In contrast, Proof of Stake (PoS) relies on democratic, open-source electioneering to select validating nodes for every block.

PoW rewards miners for solving mathematical problems with newly created crypto tokens, while PoS rewards validators with transaction fees. PoS systems select random users in the blockchains, making the networks impressively secure.

Proof of Stake systems start by selling a stock of pre-mined coins, and others switch from PoW systems. The switching process is called forging, and it includes locking coins in stakes. The size of each stake determines if it’s viable for validating the next block. Robust stakes have a more competitive advantage.

Nodes forge blocks by first authenticating transactions to match details on previous information blocks. Designers had to address the concern that wealthier nodes could get all the staking bids. Therefore, crypto startups implement:

  • Coinage selection: this strategy considers how long users lock their coins in stake. Coinage is determined by the number of coins multiplied by the period of stake. Coinage is reset to zero after forging, and networks stipulate minimum coinages for staking. This way, nodes with large stakes don’t get dominant control over the network.
  • Randomized block selection: this strategy is predictable, but it provides sufficient protection from corruption. The system selects validating nodes transparently via stake sizes and hash values.

Now, without further ado, let’s review the best staking coins in 2020 worth your time and fiscal investment. 

Best Five Staking Coins in 2020

NOW Token

This digital asset is native to ChangeNOW, a robust crypto exchange platform. The staking coin empowers users to buy numerous products within the NOW infrastructure.

The staking rewards are annual, and staking longer rewards more. You can lock as little as 10 NOW tokens and manage these digital assets via:

  • Token Freezer.
  • Guarda Wallets staking tools.
  • BEPTools.

The tool you use to freeze your tokens will automatically predict your rewards every week. Users stand to gain significantly by staking NOW tokens, yielding high interests, weekly rewards, and demanding little principal investments.

Decred (DCR)

This staking coin was announced in 2016, and it forked from Bitcoin. The designers, miners, and validators disagreed with internal Bitcoin governance. Therefore, they created this hybrid coin, which is powered by both PoW and PoS mechanisms.

The Decred platform makes DCR tokens attractive via:

  • Smart contracts.
  • Public proposal platform.
  • Cross-platform wallets.
  • Cross-chain atomic swaps.

Decred PoW/PoS mechanisms require miners to build new blocks by validating transactions. The miners earn 60 percent of block rewards, and DCR holders can obtain voting tickets for all open network proposals.

You can stake DCR in two ways:

  • As a solo voter.
  • Through voting service providers.

When voting solo, you need to use the native command line and connect your wallet to Decred’s blockchain. Voting service providers charge about five percent of rewards for staking on behalf of users.

It supports user democracy, empowering network members to vote for consensus. However, much like Bitcoin, Decred can’t scale easily, and it falls behind in transaction speeds.

Tezos (XTZ)

This cryptocurrency is novel compared to others since it was launched in June 2020. It serves multi-purposes and is reliable for executing smart contracts. It is the native coin of a self-correchttps://tezos.com/ting platform.

The Tezos blockchain utilizes a unique codebase, using the OCaml computer language. Its PoS consensus implements delegated Liquid Proof of Stake.

XTZ is popular because it offers high staking to third-parties, who claim up to 25 percent of staking rewards. The 2020 ROI for staking Tezos is 5-6%. It is stabilized by its codebase, which allows self-correcting and built-in governance. Thus, it minimizes the risk of hard forks like the case of Bitcoin’s blockchain.

Tezos are created via ‘baking,’ which is just another name for staking. Validators allowing fraudulent transactions are to lose all their staked Tezos immediately the incorruptible blockchain flags incorrect validating. This is significant because bakers must have 8,000 Tezos to stake.

Algorand (ALGO)

ALGO is permissionless and decentralized. It transcends bordered economies and bypasses the need for financial regulators and other third-parties. ALGOs are great staking coins because of the low transaction costs involved.

This coin is native to the Algorand network, which utilizes Pure Proof of Stake to validate transactions. It does not facilitate users to delegate staking responsibilities to other nodes.

This blockchain reduces the risk of dominant users taking over. It decentralizes the network and disallows staking delegations. Thus, it reserves the voting power for the majority’s interests. Staking ALHGOs is relatively easy, and you only need a non-custodial wallet to hold ALGO tokens.

Just one ALGO is enough for staking. Users can earn ten percent annual interest, 5.46% staking on StakingRewards.com, or eight percent on Binance. Algorand facilitates 1,000 transactions per second, attracting them because of easy user experiences. Staking rewards are paid out every 20 minutes.

Loom Network (LOOM)

The Loom Network is a Platform as a Service meant for dApp developers. It supports Solidarity dApps running on side chains of the crypto network. This platform allows different application developers to personalize their consensus-building mechanisms.

Validating Loom transactions is easy, and users can rely on Delegated Proof of Stake. Scaling becomes easier, but users still enjoy Ethereum’s blockchain security.

These staking coins come into the market in 2018, but users started staking LOOM tokens a year later. By 2020, the Loom Basechain bridged different chains via impeccably high performance.

Cross-chain functionality makes LOOMs attractive stake coins. Developers use this Platform as a Service network to pay for hosting, and staking users can enjoy the rewards of creating new blocks.

All you need is one of the following wallets that are compatible with Loom’s blockchain:

  • Trezor.
  • Metamask.
  • Ledger.

Users must meet gas costs on the Ethereum network by depositing some ETH. Afterward, they need to connect their wallets to the LOOM Basechain Wallet for staking.

This network is popular because you can delegate staking to validators, who will claim 25% of your stake rewards. You can expect an annual ROI of 17% from LOOM stakes.

Parting Shot

Let’s agree that these coins are all pretty attractive investment options. Their main benefits include:

  1. Fast delivery.
  2. Lucrative ROI.
  3. Transparent, immutable accounting.
  4. Daily and annual payouts.

Validators are much quicker than bitcoin miners, which makes staking coins appealing to novice users. 

Staking crypto coins is a great investment option for crypto users. It makes it easier to earn high-interest rates on your savings, and you can conveniently, securely convert fiat currency into digital currencies. 

Embrace staking coins as crypto asset institutionalization edges closer to reality. The next time your friends ask for a great investment idea, share this article with them. 

You can also check out these coins for yourself and start earning passively. Please share your best staking coins in the comments section. 

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Crypto Guides

‘Decred’ – The First Of Its Kind Autonomous Digital Currency

Introduction

Introduction

Introduction

Decred (DCR) stands for Decentralized Credit and it is an autonomous digital currency. As the name says, it brings decentralized decision-making and governance to the platform in the form of votes from both miners and holders of the coin. The value proposition of this coin is that it is secure, adaptable, and sustainable on its own.

The coin is secure since it uses the combination of proof of work (POW) and Proof of Stake (POS) hybrid consensus mechanism. Hence, it is more expensive in order of magnitude to attack a hybrid model. The adaptable part of the coin is because of the voting rights granted to its miners and holders, providing them their say in the project level decisions. This will prevent hard forks and help in developing technology as we go further.

Lastly, they are sustainable as 10% of each block reward goes to the treasury. This leads to a very flexible model to incentivize the miners/contractors for their work.

How does the hybrid POW/POS work?

🏳️ The first block is mined using standard Proof of Work mechanism.

🏳️ Randomly five validators with a stake in the system are chosen from the pool to validate the block.

🏳️ If three out of the five validators are in consent with the validity of the block, the block gets added to the blockchain.

🏳️ 60% of the reward goes to the block miners, 30% of the reward goes to the validators while 10% of the reward goes to the Decred project treasury.

While the POW mechanism is pretty the same, POS needs some explanation in the context of Decred.

🏳️ People with DCR should buy some tickets to be part of the validators pool in the system

🏳️ For each block, only 20 tickets are allowed, and hence you have to pay some fee if you have to be selected as a validator quicker

🏳️ Once you are selected as a validator, your ticket will be treated as immature until 256 blocks are mined, approximately equal to 20 hours.

🏳️ Once your ticket is entered into the lottery pool, five validators are chosen randomly, and hence one has to wait for their chance. The system is designed in such a way that the chance of a ticket being selected as a validator is 99.5% before its expiry, which is four months in general.

Security

It is estimated that it is nearly 22 times more expensive to hack a hybrid POW/POS consensus mechanism than a pure POW network. Hence the system is very secure.

Governance

As we have already said before, the project level decisions are taken in the form of voting by both miners and holders of the DCR. Decred has never done an ICO or take funds from any private organization. They have created their funds like Dash, with every 10% of block reward going to the treasury. This treasury is maintained via DAO’s, decentralized autonomous organizations, which run on their own. This is how it works.

  • Anyone in the community can propose an improvement proposal for a small fee to avoid any spam.
  • Stakeholders, miners/holders can vote on the projects that they would likely to be received funding
  • Once approved, the funds are released in the form of a decentralized autonomous entity (DAE’s).

Decred is an excellent project due to its governance system. There are thousands of cryptocurrencies, but it’s scarce that any one of them has a good governance mechanism. A suitable governance mechanism ensures the network’s credibility and also forking of any form is avoided. Decred is a highly underrated project which should be recognized for its innovation. Cheers!

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Cryptocurrencies

Decred Review: Is It the Ideal Cryptocurrency?

Cryptocurrency represents freedom of finance. Decentralized, censorship-resistant, and peer-to-peer are some of the words that we ascribe to it. But whether the vast majority of cryptocurrencies meet these criteria is a grey area.

Cryptocurrency represents freedom of finance. Decentralized, censorship-resistant, and peer-to-peer are some of the words that we ascribe to it. But whether the vast majority of cryptocurrencies meet these criteria is a grey area.

Cryptocurrency represents freedom of finance. Decentralized, censorship-resistant, and peer-to-peer are some of the words that we ascribe to it. But whether the vast majority of cryptocurrencies meet these criteria is a grey area.

Decred is a cryptocurrency launched in February 2016 that attempts to live up to these ideals. Its team of founding developers comprises of former developers of the notable btcsuite, a version of Bitcoin programmed in the Go language.

In this article, we’ll cover the exciting highlights of the Decred project and leave you to decide whether it’s the optimal currency or not. 

The Principles of Decred

Decred endeavors to live by these principles:

☑️ Free and Open Software – All software developed as part of Decred shall be free and open software

☑️ Free Speech and Consideration – Every member has the right to communicate opinions and ideas without fear of censorship, as long as it’s based on fact and reason. 

☑️ Multi-Stakeholder Inclusivity – A diverse set of views and users shall be represented and encouraged.

☑️ Incremental Privacy and Security – Privacy and security are priorities, and they shall be treated as such, and shall be incrementally implemented and on a continuing basis, both proactively and in direct response to attacks.

☑️ Fixed Finite Supply – Issuance of coins is finite, and the total issuance shall not exceed 20, 999,999.99800912 DCR, with a block subsidy that adjusts every 21.33 days by a reducing factor of 100/101.

☑️ Universal Fungibility – Universal fungibility is central to Decred as a store of value, and any attacks against it shall be met with countermeasures.

Breaking down Decred

Decred has a maximum supply of 21 million. The project never held an ICO, but an airdrop of 282.64 DCR was awarded to 2972 selected participants during the launch. Its all-time high was $99.74 on April 25, 2018, and its all-time low at $0. 394796 on December 28, 2016.

As of February 21 21, 2020, the price of Decred is $20.53 at a market rank of #37. Its 24-hour volume is $28, 260, 170, with a circulating supply of 10, 786, 831.

Each time DCR is mined, 60% is awarded to the PoW miner, 30% to PoS voters, and 10% held by Decred for future development.

How to Get Involved With Decred

Decred designates three ways through which you can interact with the platform:

The Wallet – Through the wallet, you can send and receive funds as well as take part in PoS voting.

Proof-of-Work Mining – You can use your computing power to validate transactions on the network and generate new tokens.

Proof-of-Stake Mining – Through ownership OF Decred tokens, you can vote on network development issues and validate transactions. 

All you need to send or receive Decred tokens is an address that you can easily generate from any Decred wallet. Once you own Decred, you’re eligible to join a staking pool and participate in PoS voting and earn rewards while at it.

What Problems Does Decred Intend to Solve?

Decred developers are huge blockchain and Bitcoin fans. However, they identified problems with how Bitcoin operates. As Bitcoin’s popularity has surged, the decision-making process seems to get more centralized by the day. This is evidenced by, for instance, the concentrated power in the hands of powerful mining companies.

In addition, almost any major upgrades to the Bitcoin software have to take place via a hard fork. This is what happened in 2017 when one section of the community proposed the SegWit2x hard fork on the chain. The two opposing sides got involved in hostile debates, peppered with name-calling and threats. The hard fork was finally called off, but not before leaving sharp divides in the Bitcoin community.

According to Decred, such divisions and the power that a particular section of the community might have over the cryptocurrency is counterproductive to the ideals, spirit, and the world of blockchain and cryptocurrency.

We’ve all seen what happens when two opposing sides do not arrive at a consensus. Factions can decide at any time to create a hard fork off the open-source Bitcoin code. Cryptocurrencies like Bitcoin Cash, Bitcoin Gold, Bitcoin Satoshi’s Vision, and Bitcoin Diamond are all offshoots of the original Bitcoin blockchain.

The Problem with Hard Forks

Forking is never the ideal outcome for cryptocurrency. Let’s see below why:

Repeated hard forks are bad for investor sentiment. After the Bitcoin Cash hard fork, Bitcoin prices took a tumble.

Hard forks fracture the Bitcoin community. The flared up tensions, and hard-line stances do no good for the community and the cryptocurrency sphere as a whole.

New hard forks are susceptible to attacks. So far, the biggest public blockchain to succumb to a 51% attack is, you guessed it, a hard fork. This blockchain is Bitcoin gold, and the attack happened in May 2018. The attacker made away with roughly 388,000 BTG worth $17.8 million then.

Hard forking undercuts the economic aspect of cryptocurrencies. For instance, the Bitcoin hard forks are confusing to users and undermine Bitcoin’s principle of a capped supply.

Decred presents a vision and cryptocurrency that’s free of hard forks, especially ones that fracture the community. While a hard fork is possible on Decred, its voting protocol is designed so that users can democratically vote on changes before activation.

Let’s look at the various mechanisms that Decred employ that will help it realize fair, smooth, and efficient governance.

Decred’s Hybrid PoS and PoW System

Decred’s voting system utilizes a hybrid of the two best-known consensus mechanisms: proof of work and proof of stake. 

These are the basics of how these two interact:

  • Miners mine for a block using PoW
  • Five token holders are randomly chosen to verify the block
  • If three of these validators confirm the validity of the block, it is recorded on the blockchain
  • 60% of the block rewards go to the miners, 30% to the validators, and 10% to the Decred project for future development.

With PoS, anyone who holds Decred tokens can participate in the staking system in this way:

  • DCR holders can purchase tickets with their tokens. The tickets give them pass to be part of the system
  • Only 20 tickets can go to any one block at any time. You may have to wait to get mined, but if you wish to get mined faster, you’ll need to pay some fees.
  • Once mined, your ticket is “immature” and will be held outside the random draw pool until 256 blocks have been mined, which is in approximately 20 hours.
  • After your ticket enters the draw pool, you will have to hold out for your chance to be chosen as one of the five validators that are randomly picked to verify the block
  • Your ticket has a 50% chance of being selected within 28 days and a 99.5% chance of being selected before it expires (after around four months).
  • Once your ticket’s chosen, you’ll help validate a block and be rewarded with a price for the ticket and also a staking reward.

The Decred system is also fair in that validators can participate in staking pools. As such, if a validator can’t make it to be part of the validation process, they can simply have their pool validate a block on their behalf.  

So far, you can see that Decred gives the power of participation to both users and miners. Unlike the Bitcoin system, miners do not possess disproportionate power over the network. If, for instance, a miner decides to mine a malicious block i.e., a transaction unrelated to the chain, validators can simply decline to verify the block. As you know already, PoW takes a lot of computational power, and for that, miners have very little incentive to do something that won’t pass with the validators.

How Safe Is the PoW/PoS Hybrid?

Just HOW safe is the PoW/PoS hybrid mechanism? A crypto analyst named Zubair Zia made it his mission to test the security of Decred’s chain vs. Bitcoin’s or a PoW/PoS model vs. a pure PoW model. He wanted to see which chain would more easily succumb to a 51% attack.

He used BITMAIN’s Antminer s9i’s, which has a rate of 14 tera-hashes per second. His calculations demonstrated that it was 22 times as expensive to hit Decred as compared to Bitcoin as of June 2, 2018.

In short, the hybrid system is 22 times more secure than a purely PoW system.

Lightning Network for Transactions

Decred has also implemented the Lightning Network.  The Lightning Network (LN) is an off-chain technology that has been explored by multiple cryptocurrencies to improve scalability. LN helps to settle payments outside of the blockchain so as to reduce traffic and backlog on the main chain.

LN works by having two users set up a payment channel on the network and depositing an equal amount of funds. Any time one user wishes to transact, they simply send a promissory note to the other user indicating a change of the total sum in the shared channel.

Since transactions happen off the chain, users also pay fewer fees since there’s no queue. Transactions are also instant, and there’s even added privacy thanks to a Tor-like routing algorithm for transactions. 

Decred’s Politeia

Thanks to a decision-making system called Politeia, Decred has managed to achieve decentralization more than any other existing cryptocurrency project.

Politeia is an ancient Greek word employed in Greek political writings, especially that of Plato and Aristotle. The term has many senses, from meaning “rights of citizens” to “form of government.”

Decred’s Politeia is designed to be the ultimate form of self-governance and community autonomy over a cryptocurrency project. Users can vote to accept or reject proposals, including budgets, software upgrades, marketing plans, constitutional amendments, and so on. When launching the system, project lead Jake Yocom-Piatt noted: “The direction of Decred now lies with the collective intelligence and creativity of its stakeholders.

We look forward to the exciting projects our community will propose.”

Where to Buy and Store DCR

You can purchase DCR from several exchanges, including Binance, Bittrex, Coinswitch, Changelly, Kucoin, Huobi, and so on by trading Bitcoin for it.

As for storage, the best wallet so far is the Decrediton wallet that’s available for Mac, Linux, Windows, and so on.

Great third party options also include Exodus, Coinomi, Atomic, Ledger Nano, etc.

Final Words

Decred has undoubtedly broken the mold, especially with its first of the kind governance system. Even though not as well-known as of yet, it’s one that has modeled cryptocurrency ideals better than perhaps the whole cryptocurrency pool right now.

The team behind it is also very well-regarded in the blockchain and crypto space, which is just the icing on the cake. With such a sound philosophy and a fantastic team, Decred is poised for success. But this will depend on the community. One can only hope it will mobilize for better and more exciting features for the platform before newer projects arrive and overtake the platform. 

Categories
Crypto Guides

Consensus & Its Importance In Any Existing Cryptocurrency

Introduction
In most of our previous articles, we have discussed a lot of topics regarding cryptocurrencies. We now know the properties of cryptos, advantages, and their fundamental purpose. In this

Introduction
In most of our previous articles, we have discussed a lot of topics regarding cryptocurrencies. We now know the properties of cryptos, advantages, and their fundamental purpose. In this

Introduction

In most of our previous articles, we have discussed a lot of topics regarding cryptocurrencies. We now know the properties of cryptos, advantages, and their fundamental purpose. In this article, let’s discuss the concept of consensus and why it is essential for the existence of any cryptocurrency.

The consensus algorithm plays a vital role in validating the transactions of any crypto network. One of the crucial reasons for the success of cryptos is its ability to handle the problem of double-spending adequately. And this also an important reason for the failure of digital currencies before Bitcoin; they weren’t able to solve the problem of double-spending. So let’s see what this problem is about.

Double Spending

Double spending is a fraud where the same money is promised for two different transactions but is spent on making only one transaction in real. This is a significant problem for digital currencies because the entire system is decentralized, and there is no entity confirming the authenticity of the transactions. The cryptos after Bitcoin alleviate this problem by waiting for the confirmation of the payments. During this wait time (which is very minimal in general), the transactions are validated by the users present in the blockchain network using the ‘consensus’ algorithms.

The consensus here is nothing but a mutual agreement within all the partiers that are present in a cryptocurrency network. The majority of the validators must approve the transactions, and this is made possible by the consensus algorithm. Also, because of this protocol, a crypto network cannot be controlled by a single person or a group of people. Now, let’s look at two of the most important and equally reliable consensus mechanisms – Proof of Work & Proof of Stake.

Proof of Work (POW)

Proof of Work is used by Bitcoin blockchain. This consensus algorithm proposes a mathematical problem for the miners in the network. To solve this challenge, high power computing devices are used, and thereby a lot of electricity is consumed. The first one to solve the problem gets to validate the transactions and communicate the same to all the other miners in the network through gossip protocol. Then all the other miners verify the transactions and seal them in a block.

The crux here is this. To solve this challenge, the miner uses a considerable amount of power and hardware, which is a costly process. Hence, one would be honest enough to not validate faulty transactions as a lot of stake from the user side is already expended. This is how POW makes the miners be reliable and run the blockchain efficiently. They are rewarded with the in-house cryptos for doing this work. Though the POW consensus algorithm is the most efficient one out there, it is the costliest of all the consensus algorithms and not eco-friendly, which is the need of the hour.

Proof of Stake (POS)

In this consensus protocol, the participants who want to be the validators must stake some of the native cryptocurrency in a virtual safe for a specified period. The network randomly picks the validators based on certain methods. The two most used methods are ‘Randomized Block Selection’ and ‘Coin Age Selection.’ In Randomized block selection, the validator is chosen based on the highest stake and lowest hash value. While in the Coin Age Selection, the validators are picked based on the duration of the native currency staked in the virtual safe. Dash and Peer coin are examples of cryptos that use POS.

Why is POS more reliable than POW? 

POS algorithm uses considerably less energy compared to POW. Hence, the process is less expensive, and most importantly, it is eco-friendly. Also, the POS protocol fulfills the fundamental property of blockchain as it serves the purpose of complete decentralization. This is not the case in POW because currently, there are large mining pools who mine cryptos (Bitcoins, for example) and get the maximum reward. But that’s not possible in POS, making them truly decentralized.

Conclusion

Apart from these two, there are other major consensuses like Delegated Proof of Stake (DPOS), Proof of Burn (PoB), Proof of Elapsed Time (PoET), and Proof of Activity (PoA). These protocols are gaining momentum because of their efficiency and eco-friendly nature. However, a lot of research is still happening to develop more efficient and cost-effective consensuses. We hope you find this article worthful. Let us know if you have any questions in the comments below.