Could forgers replace miners?
If you’ve heard of blockchain, it’s likely that you’ll have heard of miners. Miners work within Proof of Work (PoW) systems, competing to validate transactions via computational power. PoW is the established chain for cryptocurrencies and is used by Bitcoin. However, a new alternative called Proof of Stake (PoS) has received increasing attention since Ethereum, the second largest global digital currency, stated that it planned to abandon PoW in its favour.
PoW requires miners to levy vast amounts of computational power when they compete for blocks. In contract, PoS selects block creators, which are referred to as ‘forgers’. In PoS, forgers have to fulfil certain criteria before they can compete to forge a block. Initially, they must put their own wealth at ‘stake’, hence the name Proof of Stake. Forgers are chosen based on the size of the stake (in other words, wealth), and also their hash value. The stake must be at least 30 days old, and when a forger successfully forges a block the age is reduced to zero. To reduce the build up of old, large stakes, forgers are generally expected to forge a block within 90 days. Unlike miners, who are rewarded in cryptocurrency units, forgers are rewarded by a transaction fee.
Forging is thought to be more environmentally friendly than mining, as it uses less computer power and therefore less electricity. There is also a greater incentive for forgers to keep the network fraud free, as any forger who validates a fraudulent transaction loses their stake and the right to forge. In many ways, PoS chains and the forgers working within them offer a better alternative to PoW. That being said, there are various other options that keep the crypto community constantly on its toes…
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