Through the power of cryptocurrencies and the blockchain, the business world is going to change. All financial processes that are currently handled by banks will become decentralized, which means that everyone will have access to the same opportunities.
The idea of a central authority that oversees anything is going to become outdated because algorithms and the network itself are going to be the entity that oversees transactions and data. There are two ways in which this can be handled. The main options are proof of work and proof of stake. These mechanisms are used to verify blocks before they get added to the blockchain. Visit this page for more info https://www.barrons.com/articles/imf-defi-systemic-risk-crypto-51650578050.
Currently, the top two coins, Bitcoin and Ethereum, are both using proof of work, but Ethereum is going to transition to staking consensus mechanisms because it’s more environmentally friendly. However, is it safer than the traditional approach, and should you keep investing in PoW projects like PKT Cash?
What is proof of work?
The easiest way to explain this consensus mechanism is with an example. Let’s look at what Bitcoin miners are doing. Each computer competes against one another to be the first one to solve a complex mathematical equation that has only one answer.
The first one to get that answer gets rewarded with a few coins because that’s the way in which the network is structured. It’s called proof of work because, in order to get those two numbers, the computer needs to use resources and energy to complete the puzzle. It’s similar to getting gold out of a mine. You can go to coinmarketcap and learn more about it.
Somebody needs to go down into the mine, dig, and come up with the metal before it can be used as a medium of exchange. The puzzles are extremely difficult, and they’re only going to get harder over time. Imagine solving a multiplication test in reverse. For example, instead of multiplying X and Y to get Z, you just get the final number and have to determine which are the two that you need to multiply together.
Computers are practically guessing combinations trying to get the right number. That’s one of the reasons why miners want more GPUs, which is needed to increase their chance of striking it big. When the puzzle is solved, all of the other miners verify the transaction and add a new block to the entire chain.
What are the pros?
The first major benefit is the mass competition. Everyone is looking for a more efficient way to get their hands on more Bitcoin, which always rewards the people who find a better energy source or a faster technology. A lot of major gaming breakthroughs have happened because people were in need of so many graphics cards. That carries over to other industries. Click here to read more.
Another important thing is security. This consensus mechanism has never been exploited, and it’s the easiest way to maintain a consensus. It has been up 99.98 percent of the time ever since its creation. The only two times when it was turned off for a few minutes was to establish updates to the network, and every participant agreed that it was the best step to move forward.
What are the cons?
A lot of experts argue that it takes a lot of electricity to keep running these networks. Collectively, proof of work mechanisms uses more electricity than places like Ukraine and Norway. But, plenty of miners don’t like the price hikes in regular on-grid power, which is why they’re planning to go solar. More than 70 percent of the mining power for crypto is now based on renewables.
The second downside is e-waste because old miners need to be thrown out. However, since the community is all about preservation, these parts will be recycled to make newer chips and processors which will last longer. Visit coingecko.com for additional information.
How does PKT Cash come into the mix?
This project is similar to Bitcoin when it comes to using a PoW consensus mechanism, but it’s doing much more than being a simple peer-to-peer money system. It’s the first layer one solution for bandwidth, and you can earn tokens without buying thousands of dollars’ worth of miners as you would for Bitcoin.
Whenever something new gets invented, it has a first mover’s advantage. PKT is that kind of a project since it aims to create a decentralized internet that is censorship-resistant. Nothing in the crypto space happens without a cost incentive, which is why you can earn tokens in exchange for your network data. This could be used to pay off your internet bill, and you’ll also be helping in developing the future of the internet.
The main idea is to create a new internet service provider called PKT Pal that will be powered by people instead of companies. The technology they’re using enables everyone to use the internet without the need for traditional companies. All of the miners cooperate together, and they expend bandwidth to transmit data on a global scale.
The current network is low latency, and they’re going to be multiple additions based on the roadmap. A VPN is on the top of the list since security is crucial when it comes to using crypto. Compared to the products on the market today, it’s going to be free of charge, except for microtransactions which are going to be paid with PKT Cash coins. Eventually, people will also be able to pay for their internet subscriptions and bills from network rewards.