BT Daily News: Which Crypto Giant Out of Ethereum and Bitcoin Hosts the Better Consensus?
1. Proof-of-Stake VS Proof-of-Work – Which Crypto Giant Out of Ethereum and Bitcoin Hosts the Better Consensus?
The consensus a cryptocurrency uses determines how transactions are formed on the blockchain. If a cryptocurrency uses a Proof-of-Stake (PoS) consensus, transactions are confirmed by trusted validators on the network. However, for Proof-of-Work (PoW) blockchains, the crypto miner has to generate a target hash that is less than or equal to that of the block. Miners use devices that generate computations quickly to achieve this.Bitcoin (BTC), the blockchain industry pioneer, utilizes the PoW consensus. However, Ethereum (ETH), the altcoin leader, has recently switched to a PoS consensus. Each mode of consensus has its merits and its downfalls, and this editorial piece will examine each crypto ecosystem and determine which is better.
Ethereum – Solving Scalability with PoS
Ethereum is undoubtedly one of the most prolific figures in the blockchain industry. The crypto giant has provided explosive returns for its users and recently switched to a PoS consensus to heighten its performance.
PoW was Ethereum’s initial consensus. However, in September 2022, Ethereum switched to a PoS consensus to combat its high energy consumption and low performance. The switch allowed Ethereum to increase its transaction speed to 100,000 per second, improving its scalability!
Another benefit that came from the switch to a PoS consensus was its reduction in energy consumption. The Ethereum platform reduced its carbon footprint by 99.95%, increasing its sustainability and the sustainability of the dApps built on the Ethereum network.
Ethereum’s PoS consensus could have contributed to its recent positive market trend. The platform has increased its market capitalization by 6.16% in the past seven days at the time of writing. This positive trend has brought Ethereum’s market capitalization to an eye-watering $204 billion, showcasing its importance in the crypto market.
The Pioneer of The Crypto Market – Bitcoin
As many know, Bitcoin is the crypto market powerhouse. The platform has created many millionaires through its explosive growth from its inception. In July 2010, Bitcoin began trading at $0.0008. However, at the time of writing, the coin is worth $23,186.66, with an all-time high of $68,000.
Bitcoin’s dominance is apparent because it was the first cryptocurrency in existence. The platform has survived each bear market that has destroyed other cryptocurrencies, even while utilising a consensus that limits its performance.
It is reported that Bitcoin uses the same energy annually as multiple countries! However, the PoW consensus that Bitcoin utilizes ensures a high level of security for the Bitcoin blockchain.
While PoS blockchains require validators to process transactions, PoW blockchains use miners to add new blocks to the blockchain. Although this method of consensus takes longer, it allows miners to earn crypto rewards in the mining process.
2. Fed governor Waller says crypto ecosystem has distinct parts with varying potential
The parts that make up the cryptocurrency ecosystem are not all equal, the United States Federal Reserve Board of Governors member, Christopher Waller, told a conference audience on Feb. 10. He had clear preferences among the three elements of the ecosystem that he identified.Waller was hosted by the Global Interdependence Center at its “Digital Money, Decentralized Finance, and the Puzzle of Crypto” conference. He separately considered crypto assets, blockchain technology and trading technology, such as smart contracts and tokenization.
Waller focused on the broader applications of crypto technology. Research on applications of distributed ledger technology to “a wide range of data management problems” is underway. Smart contracts can be applied to non-crypto assets, and tokenization, combined with data vaults, can protect privacy without promoting money laundering. Waller said:
“While these technological developments are still in their infancy, they have potential applications beyond the crypto ecosystem that could lead to substantial productivity enhancements in other industries.”
The bulk of Waller’s talk was devoted to crypto assets. He compares crypto assets, which he said have no intrinsic value, to a commodity — corn — and used economic theory to explain that intrinsically valueless objects may be traded at a positive price due to the “the social contrivance of money. “But there is an inherent problem, he added:
“What if one day, beliefs change, and I no longer believe that someone will pay me for this object in the future? Then I clearly shouldn’t pay anything for it today, so its price goes to zero. […] However, if you buy crypto-assets and the price goes to zero at some points, please don’t be surprised and don’t expect taxpayers to socialize your losses.”
Even sophisticated, institutional investors have lost money in the crypto winter, Waller noted.
3. Mississippi State Senate Passes Bill Defending Crypto Miners’ Rights
Mississippi’s state Senate has passed a bill to protect cryptoasset miners from being discriminated against on electricity rates.According to a report by Cointelegraph, the state Senate has passed the Mississippi Digital Asset Mining Act, which now awaits its companion bill to make it through the state’s House of Representatives.
The bill, authored by state Senator Josh Harkins, will legalize home-based crypto mining and the operation of mining businesses in areas that have been designated for industrial use. In particular, the bill seeks to protect miners’ rights in a state that is known for some of the lowest electricity rates in the country and to clear the way for what it calls “regulatory challenges at the state and local level.”
In a bid for miner’s rights, the bill prohibits the state’s chief utility regulator, the Public Service Commission, from imposing “discriminatory rates” on mining businesses, while also exempting homes and business miners from money transmitter status. In addition, the bill helps clarify the state’s legal definition of “virtual currency.”
Dennis Porter, Co-Founder and CEO of Bitcoin mining advocacy organization Satoshi Action Fund, noted the “historic step” being taken by Mississippi legislators towards cryptoasset mining. The Fund, which has been active in Mississippi, operates to advocate for Bitcoin mining and protections for cryptoasset miners and businesses.