POW and DPOS are all heading towards crypto mining. That is, ways to earn more cryptos by holding cryptos. But Bitcoin works on the POW ( Proof of Work) algorithm while Hive works on the DPOS( Delegated Proof of Stake) algorithm.
I’m sure you will like to know what POW and DPOS are. Don’t worry I’ll break it down for you.
We all know that crypto currency is decentralized, that is there is no bank or body that controls it ( no third party). Rather, the currency depends on a trusted consensus in the crypto community to agree on the values and transactions. This act is considered a consensus algorithm.
PoW works by giving an approach to miners to address complex number related calculations, which are basically troublesome puzzles.
This interaction is available to people in general, however the intricacy of an exchange makes it very hard to approve the code. The way toward doing so turns into a race, with miners attempting to check the legitimacy of the code.
The first miner to settle the puzzle in the square is remunerated with responsibility for block. This approval likewise makes agreement for the exchange.
The best advantage of PoW is that it gives security to an exchange. Blockchain exchanges are mind boggling to such an extent that they prevent hackers from endeavoring to settle them, since time,energy and exertion is needed. Therefore it works with miners solving mathematical problems with the aim of validating transactions and creating new blocks to get rewarded.
The disadvantage of PoW is that it burns-through gigantic measures of energy. One examination in 2015 tracked down that the measure of energy needed to tackle a solitary bitcoin exchange was identical to the energy utilization of more than 1.5 normal American families each day.
This high energy consumption is a major big disadvantage, because it has a negative impact on the value of cryptocurrency. A lot of miners find their selves sell off their cryptos mined, to pay for the electric Bill used to mine it. Thereby converting the crypto to fiat and driving the value of the crypto down. This is the algorithm that Bitcoin works on.
But HIVE works on DPOS(Delegated Proof is Stake) algorithm. This works on a delegated way, whereby the originator of the new block is appointed based on their investments in a particular currency( that is how much stake they do have) Supported by a strong community based factor. More investments yield more power. This method works better because there is a small group of people controlling it.
But it works in a democratic way whereby the people that control it are voted by the members of the crypto community known as witnesses. So they are like the board of directors in that crypto community. And the members voting strength relies on the number of tokens they hold. So obviously, those with more tokens have higher voting strength/power than those with less tokens. This allows the community to vote out any member that doesn’t follow the rules or misbehaves, or impacting negatively to the community.
This method of earning crypto doesn’t require energy as much as POW. And this technology is viable to evolve as the world and technology evolve also. This is because individuals can bring up new ideas to help the community. Making sure that the crypto currency value is protected.