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SVTPerformance's Chain of Restaurants
Road Side Pub
BITCOIN
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<blockquote data-quote="quad" data-source="post: 16596333" data-attributes="member: 17952"><p><strong><u>Short answer:</u></strong></p><p>Staking means you hold your crypto long term in a special wallet and are rewarded for this via interest payouts in the crypto of your choice. For example you could stake Ethereum and the interest could be paid out in Bitcoin. Or in Ethereum if you choose that route.</p><p></p><p><strong><u>Long Answer:</u></strong></p><p>Not an expert but this is how I understand it.</p><p></p><p>Bitcoin, Ethereum and a few others are secured via "Proof of Work" or POW. That means the transactions are solved by computing devices like GPUs and ASIC devices, also called "workers". Miners are basically people or companies that have a lot of "workers" hashing away on Bitcoin, Ethereum, Litecoin etc. They have to put work in to solve transactions.</p><p></p><p>A tremendous amount of hashing power is available and used and is increasing as time goes on. The transactions are all encrypted via various algorithms hence why they are called cryptocurrencies. Bitcoin has the most hashing power followed by I believe Ethereum.</p><p></p><p>Bitcoin = SHA-256</p><p>Ethereum = Ethash</p><p><a href="https://en.cryptonomist.ch/2019/06/15/mining-algorithms-proof-of-work/" target="_blank">Mining algorithms (Proof of Work): SHA-256, Scrypt, CryptoNight, Ethash and X11</a></p><p></p><p>A very important part is that the hashing power is decentralized which means there are many people and companies (miners) operating equipment on the network. If all the hashing power was centralized a 51% attack could occur. Below is a link explaining how that works. But basically things like double spending could occur where the accounting is not honest - for example you send 10 BTC to a friend and still get to keep the 10 BTC in your wallet. Or recent transactions could be erased from the blockchain as happened with Verge XVG recently.</p><p></p><p><a href="https://www.investopedia.com/terms/1/51-attack.asp#:~:text=A%2051%%20attack%20is%20an%20attack%20on%20a,blocks%20by%20preventing%20other%20miners%20from%20completing%20blocks" target="_blank">What Is a 51% Attack?</a>.</p><p></p><p><a href="https://cryptoadventure.org/verge-xvg-51-attack-hundreds-of-thousands-of-blocks-affected/" target="_blank">Verge (XVG) 51% Attack: Hundreds Of Thousands Of Blocks Affected</a></p><p></p><p>The problem with POW is it uses a lot of electricity. So another process was developed called "Proof of Stake" or POS. In this system the network is secured via many stakeholders holding a cryptocurrency in a special wallet that's connected to a validator. The validator is a computing device with adequate processing power. For example a quad core with 16 GB RAM. Validators are incentivized / rewarded to hold / stake their cryptos via interest payouts in the cryptocurrency over time. Bad validators / actors are penalized via slashing of funds. A POS system also needs to be decentralized like a POW system otherwise a 51% attack could also occur.</p><p></p><p>A validator needs to be online 24/7 and will be penalized if it goes offline.</p><p></p><p>Ethereum 1.0 is a POW cryptocurrency. Ethereum 2.0 will be a POS cryptocurrency. (lol) Cardano has been designed to be a POS cryptocurrency from the get go.</p><p></p><p>32 ETH is required to be an Ethereum validator.</p><p></p><p><a href="https://nirolution.com/ethereum-validator/#:~:text=Ethereum%20Validators%20work%20on%20the%20proof%20of%20stake,the%20latest%20data%20or%20work%20as%20a%20notary" target="_blank">Best Ethereum Validator Explanation: How to Become a Validator</a>.</p><p></p><p>However exchanges like Coinbase (and others) will allow individuals with less than 32 ETH to stake their ETH on a pool with others. Stakeholders will receive interest payouts in ETH. Same goes for Cardano and a few others. The risk of slashed funds due to a bad validator is taken away because Coinbase would be taking on that burden.</p><p></p><p>Staking will promote people to save their investments and grow their wealth - the opposite of what is happening in the FIAT world where interest rates for savings accounts are negligible.</p><p></p><p>POS also uses a lot less power than a POW system. Experts are divided on whether POS offers more or less security compared with POW.</p></blockquote><p></p>
[QUOTE="quad, post: 16596333, member: 17952"] [b][U]Short answer:[/U][/b] Staking means you hold your crypto long term in a special wallet and are rewarded for this via interest payouts in the crypto of your choice. For example you could stake Ethereum and the interest could be paid out in Bitcoin. Or in Ethereum if you choose that route. [b][U]Long Answer:[/U][/b] Not an expert but this is how I understand it. Bitcoin, Ethereum and a few others are secured via "Proof of Work" or POW. That means the transactions are solved by computing devices like GPUs and ASIC devices, also called "workers". Miners are basically people or companies that have a lot of "workers" hashing away on Bitcoin, Ethereum, Litecoin etc. They have to put work in to solve transactions. A tremendous amount of hashing power is available and used and is increasing as time goes on. The transactions are all encrypted via various algorithms hence why they are called cryptocurrencies. Bitcoin has the most hashing power followed by I believe Ethereum. Bitcoin = SHA-256 Ethereum = Ethash [URL="https://en.cryptonomist.ch/2019/06/15/mining-algorithms-proof-of-work/"]Mining algorithms (Proof of Work): SHA-256, Scrypt, CryptoNight, Ethash and X11[/URL] A very important part is that the hashing power is decentralized which means there are many people and companies (miners) operating equipment on the network. If all the hashing power was centralized a 51% attack could occur. Below is a link explaining how that works. But basically things like double spending could occur where the accounting is not honest - for example you send 10 BTC to a friend and still get to keep the 10 BTC in your wallet. Or recent transactions could be erased from the blockchain as happened with Verge XVG recently. [URL="https://www.investopedia.com/terms/1/51-attack.asp#:~:text=A%2051%%20attack%20is%20an%20attack%20on%20a,blocks%20by%20preventing%20other%20miners%20from%20completing%20blocks"]What Is a 51% Attack?[/URL]. [URL="https://cryptoadventure.org/verge-xvg-51-attack-hundreds-of-thousands-of-blocks-affected/"]Verge (XVG) 51% Attack: Hundreds Of Thousands Of Blocks Affected[/URL] The problem with POW is it uses a lot of electricity. So another process was developed called "Proof of Stake" or POS. In this system the network is secured via many stakeholders holding a cryptocurrency in a special wallet that's connected to a validator. The validator is a computing device with adequate processing power. For example a quad core with 16 GB RAM. Validators are incentivized / rewarded to hold / stake their cryptos via interest payouts in the cryptocurrency over time. Bad validators / actors are penalized via slashing of funds. A POS system also needs to be decentralized like a POW system otherwise a 51% attack could also occur. A validator needs to be online 24/7 and will be penalized if it goes offline. Ethereum 1.0 is a POW cryptocurrency. Ethereum 2.0 will be a POS cryptocurrency. (lol) Cardano has been designed to be a POS cryptocurrency from the get go. 32 ETH is required to be an Ethereum validator. [URL="https://nirolution.com/ethereum-validator/#:~:text=Ethereum%20Validators%20work%20on%20the%20proof%20of%20stake,the%20latest%20data%20or%20work%20as%20a%20notary"]Best Ethereum Validator Explanation: How to Become a Validator[/URL]. However exchanges like Coinbase (and others) will allow individuals with less than 32 ETH to stake their ETH on a pool with others. Stakeholders will receive interest payouts in ETH. Same goes for Cardano and a few others. The risk of slashed funds due to a bad validator is taken away because Coinbase would be taking on that burden. Staking will promote people to save their investments and grow their wealth - the opposite of what is happening in the FIAT world where interest rates for savings accounts are negligible. POS also uses a lot less power than a POW system. Experts are divided on whether POS offers more or less security compared with POW. [/QUOTE]
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