2020 may not be a great year for the world economy or health, but it’s certainly one of the best times for cryptocurrencies and crypto investors, especially those who are staking PoS currencies.
Even though both PoW and PoS systems are important in their respective positions, this year has been particularly good for proof-of-stake coins. Many new PoS cryptos with staking features have been introduced in 2020, and the demand for and user interest in staking are now more than ever.
With global events like Etheruem 2.0’s upcoming launch and the arrival of new, promising PoS coins such as WISE and Tezos, the future looks bright for both the proof-of-stake system and staking.
What are PoS and Staking?
PoS, or Proof-of-stake, is a consensus mechanism in the blockchain. PoS requires a person to hold/stake some coins in the system in order to be able to mine new blocks/cryptocurrencies.
Staking is the process in which users are rewarded for staking (locking up) their coins in the smart contract of a particular blockchain. Same as mining, staking also involves transaction validation and block creation.
Why are PoS and Staking becoming so popular?
The proof-of-stake system was launched to overcome the limitations of PoW.
The primary purpose of any blockchain consensus is to solve the three major issues of security, stability and decentralization. Now, PoW does solve the issue of scalability, but then it becomes vulnerable to security threats.
Besides security, PoS also solves the high cost and energy consumption problem of PoW, as it doesn’t require users to buy expensive hardware and electricity in order to mint new coins and earn rewards.
Another reason why PoS systems and currencies are getting so popular these days is the increasing user interest in Decentralized Finance.
DeFi, or Decentralized Finance, refers to the development and application of financial systems on the blockchain. PoS Projects like WISE intend to redefine the DeFi space by creating a new kind of blockchain-powered financial ecosystem that is transparent, low-cost and free of centralized entities.
For example, WISE runs a blockchain-based staking system where users are rewarded in a fair and transparent manner for staking (locking up) their funds to ensure the security of the blockchain system. Meanwhile, users are in complete control of their funds/tokens and never have to trust any middleman or third-party with their money. They can redeem their principal as well as interest earned through staking at any time from WISE.
Also, WISE effectively solves the blockchain trifecta, i.e. Security, Decentralization, and scalability.
Security: WISE smart contracts are pure code and immutable that are constantly audited for errors and loopholes. The contract is fixed and cannot be changed. Since all transactions are performed from the safety of the user’s private wallet, no security threats are possible.
Decentralization: As a non-profit PoS coin, WISE sends about 90% of the launch money (investment) to Uniswap for creating a massive liquidity pool. No middlemen are involved in any process or transaction, thus maintain complete and pure decentralization.
Scalability: WISE offers unlimited scalability along with huge growth potential to the investors, as it only costs a few cents per transaction.