The New Consensus Mechanism for Bitcoin
The New Consensus Mechanism by Blockstack’s Creates New Utilization for Bitcoin
On Thursday, Blockstack, a decentralized web-startup, has made public their plans to utilize a new consensus mechanism. The new consensus mechanism might bring further use for the most popular cryptocurrency in the world, Bitcoin.
The new consensus mechanism is named Called Proof-of Transfer (PoX). With the new consensus mechanism, miners on the Blockstack’s Stacks blockchain are required to make use of BTC to mine a block. In simple terms, miners get STX tokens in exchange for the BTC they post on the blockchain.
The BTC posted will be distributed among stackers; stackers keep documentation of the blockchain and also decide on which version of the blockchain miners can mine on.
Why did Blockstack Create a New Consensus Mechanism?
Many might wonder why Blockstack has decided to add to the list of consensus mechanisms already available in the blockchain world. As the significant vision of Blockstack, which is to place more authority with users regarding their identities and data, security is a crucial parameter.
Similar to Bitcoin blockchain, that has reduced the rate of fraudulent activities by requiring new costs before a new block can be written. Bitcoin needs members to invest in the high cost of electricity to participate with the popular Proof-of-Work (PoW) consensus mechanism. Blockstack, in a similar fashion in it new consensus mechanism PoX requires its miners to buy Bitcoin and invest it in the network to participate in the mining process, the system believes this will reduce the rate of malicious entries.
How does the New Consensus Mechanism Differ from the other Consensus Mechanism?
Proof of stake operates with the same overall process as the famous Proof-of-Work (PoW); however, the method of achieving their goals differ. Proof-of-stake makes use of validators rather than miners.
The validators are required to lock up some of their Ether as a stake in the Network to be considered for mining. Afterward, bets will be placed by the validators on the next possible block that will be added to the chain. When the next block is added, the validators with the correct prediction get a block reward according to the proportion of the Ether earlier staked.
Unlike the proof-of-stake, the Proof-of-Transfer doesn’t require the miners to put any of their assets at risk to participate but instead pay a fee for locking up their STX for a determined amount of time. In comparison to the Proof-of-Work, the Proof-of-Transfer incorporates the use of Proof-of-Work to launch new blockchains that are rooted in Bitcoin’s security.
In conclusion, the new consensus mechanism PoX will give participants some new blockchains opportunities to earn Bitcoin bonuses. Some Bitcoin incentives, before PoX, were not feasible.
These bonuses can potentially be used in cases such as community participation, ecosystem developer assets, different player opportunities, etc. How fast it will enhance the usage of Bitcoin is a question to be answered after its launch, the CEO of Blockstack has confirmed that the new version will only go live when the first 20 miners activate the latest updated software. Read more about this topic on CoinDesk.