The same may be said for cryptocurrencies, similar to how a car engine makes the automobile drive and other engines make the automobile more or less efficient. The consensus protocol is the engine of a cryptocurrency. The blockchain of a cryptocurrency is distributed, which means that no single body controls the network. Rather, it is distributed among nodes that validate transactions. Consensus procedures ensure that all nodes are in agreement (i.e., in agreement) and that the data on the blockchain ledger is accurate.

With our sustainability hats on, we’re going to take a new look at consensus protocols!

Contents hide

1. Proof of Work and Proof of Stake are the two most common consensus protocols.

2. Significant Energy Savings

3. Security at a Cost

4. Security is the same, but it’s more energy efficient

4.1. 1% Deposit Bonus & Withdrawal Fees On Crypto Deposit in BuyUcoin

4.2. A Decade in the Making: US SEC Approves 11 Bitcoin ETFs, Igniting Market Enthusiasm

4.3. Will Bitcoin Price Increase 200% When Bitcoin ETF Is Approved?

4.4. 10 Must-Have Features on Bitcoin Staking Site

4.5. Christmas in the cryptocurrency world arrives early as the pre-holiday crypto market heats up

Proof of Work and Proof of Stake are the two most common consensus protocols.

Proof of work (PoW), made famous by Bitcoin, and proof of stake (PoS), made popular by Cardano’s Ouroboros, are the two most popular types of consensus protocols. Selecting a block producer, confirming the block is right, and rewarding the block producer are the three major roles of a consensus system. The most significant distinction between Bitcoin’s PoW and Cardano’s PoS is how the block producer is chosen.

PoW is based on a physical resource that necessitates the use of hardware machines like ASIC. PoW validators (miners) use the hardware devices’ hashing capability to solve a computational challenge. The act of using machinery is referred to as “mining.” PoW miners compete to solve the problem first, with the winner receiving the right to build the block. Miners with more hardware have more power, which means they have a better chance of creating the next block.

The concept of PoS is founded on the concept of a virtual resource. Cardano assigns which stake pool gets to build blocks in the blockchain using its native coin, ADA. Every ADA is the same as a lottery ticket. You are picked to create the block if your stake pool is picked. Ada holders can take part by delegating their ADA to stake pools in order to boost their chances of being chosen. Delegators receive a percentage of the incentives in exchange.

Significant Energy Savings

The selection of a block producer consumes 99 percent of the energy in Bitcoin and other proof of work algorithms. Cardano employs a proof-of-stake mechanism, which is significantly more energy-efficient. Cardano, on the other hand, requires only six gigawatt-hours of energy each year, compared to Bitcoin’s 115.85 terawatt-hours.

Cardano: 6 gigawatts = ~2 average power plants

Bitcoin: 115,850 gigawatts = Rank 31st in country’s energy consumption, surpassing the Netherlands.

As can be seen, Cardano is far more energy-efficient than Bitcoin. But two power plants is still a lot of power, right? Not at all, especially because this ignores our SPOs who use renewable energy, as well as the energy required to mine, process, and produce raw materials for real fiat money!

Security at a Cost

The blockchain’s blocks serve as a log for transactions and who owns what. The ledger can be modified if the protocol fails. This could have disastrous repercussions, resulting in people losing money and gaining control of the network. The consensus protocol must have the highest level of security due to the severity of the repercussions.

Bitcoin is one of the most secure protocols, but the physical resources and energy consumption required to take over the network make it even safer. An attacker needs to control a majority of the hashing power to distort and alter the blockchain. Security comes at a cost, and as the Bitcoin network develops, so will the energy usage.

What if you could have your cake and eat it as well? Use a third of the energy while maintaining the same level of security.

Security is the same, but it’s more energy efficient

Cardano offers the same high level of security as Bitcoin, but instead of using hashing power from mining equipment, it relies on its native token, ADA, for consensus. Controlling the majority of ADA is required to skew Cardano’s network. The amount of money required to gain majority control of Cardano’s network is calculated below.

31,948,309,441 ADA – Circulating supply

16,293,637,815 ADA – 51% of the circulating supply

US$1.60 – Current price of ADA

US$26,069,820,504 – Amount of dollars to control 51% of ADA at the current price

It will cost about US$26 billion for an attacker to get control of 51 percent of the network, not including the price rise that will occur if a buyer tries to buy that much ada. Furthermore, as the network grows and the value of ada rises, the cost of attacking the network rises, while the cost of securing the network remains roughly constant.

Furthermore, Cardano’s protocol is subjected to a rigorous peer-review process and is subjected to the same high-assurance code procedures employed by developers of jet engines and NASA, where code failure results in catastrophic occurrences like the Ethereum DAO breach.