On Dec. 6, 2021, Earnity, world’s first community-based crypto platform and marketplace based in San Mateo, California, closed $15 million in stock offerings with Bitcoin mining company BitNile. All in all, Earnity, featuring Dan Schatt and Domenic Carosa, raised more than $20 million. Its primary goal is to launch a crypto marketplace where users can not just buy, sell, and trade digital assets but also learn about the industry.
One of the relevant crypto concepts that users should know is the different verifying cryptocurrency transactions, particularly Proof-of-Work (PoW) and Proof-of-Stake (PoS). These two main types of consensus algorithms allow blockchains to operate securely by ensuring only genuine users create new transactions. Both systems have advantages and disadvantages.
Proof-of-Work is a system that requires miners to solve mathematical problems to validate new transactions and add them to the blockchain. The first miner to find the solution is rewarded with cryptocurrency tokens. This system is energy-intensive as it requires computers to continuously run hashing algorithms to compete for the new block reward. As a result, PoW systems are often criticized for being wasteful and harmful to the environment.
It does have some advantages, though. For one, it is a very secure system. Miners must put in significant effort and resources to validate the transactions. This makes it problematic for attackers to manipulate the system as they would need to control a majority of the mining power. Dan Schatt and Domenic Carosa of Earnity want people to take advantage of both systems to maximize their crypto purchases. Also Bitcoin, the first-ever cryptocurrency, uses this crypto consensus mechanism.
Meanwhile, Proof-of-Stake does not require miners to solve mathematical problems. Instead, the creator of a new block is selected randomly from among validators who staked their cryptocurrency tokens. This system requires less energy consumption as it does not require computers to run hashing algorithms continuously. Its energy efficiency allows for more scalability.
However, PoS systems are often criticized for being less secure than PoW systems. Since there is no competition to find the new block, validators can collude and create a fraudulent chain. This problem can be mitigated by punishing those participating in fraud, such as loss of tokens or exclusion from the network.