There might be some people who know what DPoS stands for. But for the most part, it is a brand new concept for many cryptocurrency enthusiasts. Some have even expressed their confusion over “delegated proof of stake” as an alternative to “proof of stake.” So in this post, we will explain what it is, how it goes, and why should we use it.
Proof of Stake (PoS)
Proof of Stake (PoS) is a method to achieve consensus protocol on a bitcoin blockchain network. In PoS-based cryptocurrencies, the creator of the next block is chosen via various combinations of random selection and wealth or age, that is the stake. The methodology of proof-of-work-based cryptocurrencies like bitcoin, on the other hand, relies on mining. This entails solving computationally demanding problems in order to validate payments and create new blocks.
Delegated Proof of Stake (DPoS)
Delegated Proof of Stake (DPoS) varies from the standard PoS algorithm. Like PoS, there are no mining rewards since there are no miners. Instead, token holders vote for “delegates,” who validate transactions and add blocks to the blockchain. Unlike in standard PoS, where the creator of a new block is chosen pseudo-randomly by various combinations of age and wealth, DPoS allows coin holders to vote directly for delegates — usually around 20 or 21. These delegates are then given the power to create blocks on their behalf.
DPoS System’s Advantages over PoS Systems
The DPoS system has several advantages over traditional PoS systems:
The main difference is that with DPoS, the delegates are voted on by the community. It is much more efficient in energy consumption and time to reach a consensus. It is also much more democratic since coin holders get to choose which delegates they want to give the power to validate transactions and create blocks. The downsides are that it is less decentralized than standard PoS systems since only a few delegates get to validate blocks. If those delegates collude with each other or make mistakes, it could attack the network.
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