What is Delegated Proof-of-Stake Vs. Proof-of-Stake
Let’s start with a quick breakdown of what Proof-of-Stake (PoS) is...
What Is Proof-of-Stake (PoS)?
PoS is a model of consensus that differs from the traditional mining proof-of-work model which most people are familiar with.
On Bitcoin, your computer runs a node which verifies transactions via a continually run algorithm as they look for a nonce (a specific number that acts as a key).
PoS differs in that your computer likely isn’t running an algorithm.
You don’t need an ASIC card or specialized machinery.
Instead, you need a certain amount of the tokens or coins that a company requires.
For instance, on the upcoming Ethereum Proof-of-Stake model, you need one thousand Ether to run PoS.
This is just one example of a popular coin utilizing proof-of-stake.
By staking your coins, this helps to verify transactions and act as the nodes that follow the longest chain, etc….
You not only help to solidify the chain but get rewarded in that currency for staking your coins.
Once coins are staked, they are staked for a period that the organization requires.
But, the rewards require no effort and in effect, act like a dividend.
This is regular proof-of-stake.
Now delegated proof of stake varies a bit.
Read the full Proof-of-Stake guide here --> What is Proof-of-Stake?
Delegated Proof-of-Stake (DPoS)
While PoS is a model for consensus, a voting mechanism for those involved, and a way to make a bit extra in a coin by staking yours, DPoS differs slightly.
In delegated proof of stake there are delegates.
These, are essential, representatives voted on by the community to conduct votes, etc.
That means that instead of everyone having a vote, you are voting for someone else who seems to cast a vote in your honor.
Again, a repetition of what the current dogmatic paradigm of our government is.
Although, they can be voted out easily and it can be changed depending on the organization and the rules input into the blockchain.
This consensus mechanism is proof-of-stake, but also a way to default voting for someone else.
Someone owning X amount of coin, with no knowledge of what should occur, defaults their vote to a delegate.
But, there can be a problem.
Vitalik Buterin on the Problem with DPoS
On an interview on Unchained (1) Vitalik got into a talk about the consensus models.
While wholeheartedly describing how Proof-of-stake can beat out and be more secure than proof-of-work, he then talked about the difference between DPoS and PoS.
Delegated proof of stake has the problem of taking away power from the little guy and delivering it more to the few specially elected individuals.
He talked about how at LISK this created a two-party voting system.
Replicating the American democratic voting system.
But, utilizing true proof-of-stake allows more people to vote and have a say.
One issue commonly brought up is that proof-of-stake amounts are very high taking away power from the majority of people.
Proof-of-Work For More Decentralization?
Since most of the mining on proof-of-work is done by a few mining pools in a few locations, this means, that theoretically, it is more decentralized.
While proof-of-stake, on the other hand, allows for a divergence of chains and more decentralization into actual coin holders.
Although, Delegated proof of stake still has a decentralization component and ability to get away from malicious long-chain attacks, it has few speaking for the many.
What will happen in the long-term is only a guess.
If you liked this review and want to help support the academy donate some ETH and ERC20 Tokens below!
MORE FROM THE LEARN PAGES
What Are Altcoins? A Complete Beginner’s Guide When we bring up Cryptocurrency to most people, they often shrug and nod their head. They don’t actually know what it is, but may have heard of Bitcoin. Bitcoin is the theoretical kind of Cryptocurrencies. It was the first one through the door. It’s a celebrity in a…
3 Reasons Why Now Is The Best Time To Start Using Digital Currency With the cryptocurrency markets fluctuating so much right now, people seem to be on quite a rollercoaster. But in truth, cryptocurrencies are a powerful new form of money that will benefit you as the face of the economy changes to something we’ve…
I Sent My Coins To The Wrong Address We get this question all the time… Many times people ask us if we can get their coins back when they messed up a transaction, and sadly, the answer is no. Because this is a decentralized network, human error will result in lost coins. That’s why it’s…