Bitcoin Lite is a new peer-to-peer cryptocurrency instead of mining you use the very coins/tokens that are at the heart of these systems as the “proof” that you can validate a transaction. Instead of using your capital to buy computers and electricity to run them You can simply use your capital to stake coins every day.
Bitcoin Lite proof of stake revolves around users who stake their cryptocurrency wallet balance. Not every cryptocurrency supports proof of stake, yet it is quite a common protocol in the world of altcoins. Once a user has a balance in their wallet, they need to keep the wallet open and connected to the internet to earn stake rewards Yearly the capital of bitcoinlite users would increase to 35%.
Secure Encrypted Network
Blocksize under 1MB
Proof Of Stake In essence, coin holders are responsible for safeguarding the network and coins. They take part in forging blocks in proportion to their overall % stake. Thus, a successful attack on this network becomes highly impossible. Proof of Stake is also less energy, it is seen as a greener way to run a cryptocurrency network.
In order for a miner to actually enter his block of transactions into the blockchain he will have to provide an answer, or a proof, to a specific challenge. This proof is difficult to produce but is very easily validated. This is known as Proof of Work.
For example – guessing a combination to a lock is a proof to a challenge. It’s very hard to produce this since you will need to guess many different combinations – but once produced it’s easy to validate. Just enter the combination and see if the lock opens.
Bitcoin uses the proof of work concept in order to make sure that the network isn’t easily manipulated by making mining, the process of inserting blocks into the blockchain, require great computing power.
But the proof of work concept has some downsides as well. First, a lot of computing power and electricity are wasted just for the sake of generating random guesses. Second, if proof of work continues we may run into the “tragedy of the commons” scenario. Let me explain…
Since including transactions is pretty inexpensive for miners they will accept any fee which will gradually cause people to pay less fees and miners to earn less money. In time fewer miners will mine Bitcoins, the network difficulty will decrease and the Bitcoin network will be more susceptible to 51% attacks.
One alternative suggested to the proof of work concept is the Proof of Stake concept. Rather than requiring a proof to a challenge, a proof of stake system requires to show ownership of a certain amount of money. Meaning the more Bitcoins you own the more mining power you have.
This eliminates the need for expensive mining rigs as calculations are pretty simple to prove you own a certain percent from the total amount of Bitcoins available. Just imagine that mining rigs have been replaced by coins, and if you own 1% of the total amount of Bitcoin available you can mine 1% of the transactions.
This methods forces miners to have a stake in the Bitcoin network and hopefully will deter people from abusing their mining power (since they will be devaluing their own coins). Today Bitcoin has yet to implement the proof of stake concept but other altcoins like Peercoin have already implemented some kind of version of it.
In the future, once no more mining bounties will be given, miners will gain only transaction fees.
The proof of work system
The basis of the most popular and dominant cryptocurrencies like bitcoin, is a mining and computer power-based system in which participating users are required to solve difficult mathematical problems to validate and authenticate transactions.
Large cryptographic networks like bitcoin integrated the Proof-of-work algorithm as its foundation because it provides complete decentralisation of power and control over the distribution and implementation of major technical and economic changes in the network.
To attack bitcoin, the proof of system requires the hacker to own at least 51% of the network’s hashrate or computing power, which is virtually impossible considering the size of the bitcoin network and its considerably high hashrate.
However, small proof of work-based networks are easier to hack because attackers can gain 51% of their computing power at a much lower cost
A Proof-of-work network, was recently hacked, the Krypton development team announced its transfer to a Proof-of-stake system.
If the Proof-of-work is based on mining and computing power, the Proof-of-stake derives from actual holdings of the cryptocurrency. For example, if bitcoin was a Proof-of-stake network, users that own the largest chunk of bitcoin would have the authority to make network changes and mine an equivalent portion of their funds regardless of computing power.
Conceptually, a user who owns 25% of all bitcoin would be able to mine 25% of the bitcoin network’s transactions gaining ¼ of the network power. It means that the user has a significant impact on the implementation of economic and technical changes within the network.
Interestingly, the Proof-of-stake eliminates some of the major security issues associated with the Proof-of-work scheme. The most obvious of them is the 51% attack.
Proof of work is a requirement to define an expensive computer calculation, also called mining, that needs to be performed in order to create a new group of trustless transactions (the so-called block) on a distributed ledger called blockchain Also its prone to 51% Attack where miners control the transaction of people and can double spend.
PoS is a method to try to prevent the 51% attack by encouraging people to hold coins in their wallet. And for this "service" coin holders are paid a Stake (dividend) every so many days This means that in the PoS system there is no block reward, so, the miners take the transaction fees.Proof of stake, the creator of a new block is chosen in a deterministic way, depending on its wealth, also definied as stake.
Proof of Work (PoW) is a defining an expensive computer calculation called mining blocks
In proof of stake (PoS) the "miner" of a new block is the blockchain is chosen in a deterministic way depending on wealth (stake)
A reward is given to the first who solves each block calculation
The miners do not recieve a block reward but collect network fees as the reward
miners compete with computer power to be the first to find a solution
This mechanism makes PoS mining much more energy efficient then Proof of Work
It's more environmentally friendly. There's no "red queen" competition to buy more ASIC mining hardware.
It's more expensive to attack. To attack a proof-of-work system, you just need to buy a majority mining power. To attack proof-of-stake, you need to buy a majority of the currency, which is both more expensive and will instantly lose value once you perform your attack.
PoS does not require costly hardware to colaborate to the network; consensus can be reached based solely on the amount of coins each miner has.
PoS is clearly a lot cleaner for the environment than PoW, the former needing only to own coins on the network thus allowing a "virtual mining", whereas the latter requires hardware and electricity to function.
You don’t mine with the proof of stake, instead, you have the concept of minted. What does that mean? You can receive a reward for the stake or wealth you have in the wallet. Furthermore, a proof or stake has already predetermined numbers of tokens released on the system.
Here is an example: if you have 6% of a proof of stake tokens, you have 6% more chance to receive interest.
The fundamental difference lies in the way how each method handles the dishonesty in the network. In PoW, if someone tries to cheat when creating a block, their dishonesty is forgiven by the other nodes in the network. In PoS, the dishonesty is penalized instead. Because forgiveness is the default in the former, there’s nothing stopping people from being dishonest. On the other hand, the PoS makes sure that dishonesty is severely discouraged by putting the penalty.
Recreating bitcoin's rally again for everyone in the form of bitcoin lite.
Bitcoin's mining is highly expensive so the future is bitcoin lite which gives 35% each year to stake coins.
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