Study Guide: Crypto Fundamentals (Part 1) #Write2Earn! #Cryptoeducationđ„ #LearnTogether #opensea
1. Proof of Work (PoW) vs. Proof of Stake (PoS)
Differences:
Proof of Work requires expensive equipment and high energy costs; while Proof of Stake doesnât.
Proof of Stake selects validators pseudo-randomly, while nodes compete to solve a block in Proof of Work.d) Proof of Stake requires validators to hold and stake the native cryptocurrency, while Proof of Work doesnât.
Explanation:
Proof of Work (PoW) is a consensus mechanism where nodes compete to solve complex mathematical puzzles to validate transactions and create new blocks on the blockchain. This process is computationally intensive and requires significant energy consumption.Proof of Stake (PoS) is a consensus mechanism where validators are chosen to create and validate new blocks based on the number of coins they hold and are willing to "stake" as collateral. It is more energy-efficient compared to PoW.
2. Differences between Cryptocurrencies and Digital Currencies
Correct Statements:
A cryptocurrency is a digital currency in which transactions are verified and records maintained by a decentralized system using cryptography, rather than by a centralized authority. This distinguishes cryptocurrencies from digital currencies used in centralized platforms like PayPal.
Cryptocurrencies are an implementation of blockchain technology, while not all digital currencies are.d) Cryptocurrenciesâ trading values are volatile while digital currencies values are not.
Explanation:
Cryptocurrencies are digital currencies that use decentralized systems and cryptographic techniques for secure transactions and record-keeping, distinct from centralized digital currencies.Digital currencies encompass a broader category, including both cryptocurrencies and centrally managed digital assets.