Mining – this is the extraction of cryptocurrency, performed by computer equipment based on an algorithm for proving work (PoW).
Located in different parts of the world, powerful industrial computers perform computational work and thus generate new blocks from the blockchain. Like an accounting book, it records all transactions with the cryptocurrency mined, being the backbone of any digital currency.
However, in recent years mining has become much more difficult and expensive. If earlier it was possible to dig tokens on home computers, now this requires special equipment, and extracting each new block requires more and more computing power. In addition, keeping these expensive machines in working order requires regular maintenance. Not to mention the huge cost of electricity, which added to other factors make it even more difficult for miners to work.
Today there is an alternative option for digging crypto assets – stacking.
This is a way to generate passive income, which is based on the Proof of Stake (PoS) algorithm. At the same time, the users (stackers) store their coins in the network, which guarantees the operability of the blockchain and, accordingly, the execution of all operations in it. For this, users make a profit. The more tokens are bet, the greater the chance that their owner will become the creator of a new block.
Stacking is only available for projects based on the PoS algorithm.
In addition, there is a more advanced version, UPoS (User Proof of Stake). Such an algorithm is the basis of the BTCU project. In addition to the standard betting options, there is affordable leasing of UPoS, ie the possibility of delegating coins. Not only does the protocol generate profits by freezing tokens, but it also stimulates exchange rate growth by withdrawing them from circulation. It also helps to improve the decentralization of the network – determines the level of trust in the master nodes and validators and provides an opportunity to choose to whom to delegate assets. All information about the level of trust is reflected in the rating of the nodes. In this way, the BTCU project motivates stakeholders to maintain the network.
How is this different from traditional extraction?
As mentioned at the beginning of the article, mining supports blockchain operations based on the Proof of Work (PoW) algorithm. The first cryptocurrency, bitcoin, was built on just such an algorithm. It can be said that mining is a kind of competition for computing power, while stacking is a competition between the owners of cryptocurrencies in the blockchain.
One of the main differences between digging and betting is environmental friendliness, price, and the amount of computing power.
The first process requires increasingly complex and expensive equipment, while the second does not involve the purchase of technical machines from consumers, but only the provision of coins to ensure network operation. In addition, there is the aspect of environmental friendliness – BTC mining has serious consequences for the environment, leaving a huge carbon footprint on our planet. Stacking in this regard is a completely environmentally friendly and safe way of crypto mining.
Another advantage of betting is the simplicity and accessibility for anyone who wants to start working in the digital industry. Previously, only technically savvy people could understand all the nuances of the equipment. Stacking does not require any technical skills from the user, and the process itself is significantly simplified. This way many more users will be able to master it.
In addition, the entry threshold for this activity is much lower than for digging.
Stacking is a greener and more energy-efficient way to extract cryptocurrencies. It opens up opportunities for activities and profits for more people, contributes to the development and expansion of industry, as well as to maintains the level of natural protection of our planet, which is also important.