Cryptocurrency mining is the foundation of the world’s newest and digitally powered asset class. Today there are literally thousands of different cryptocurrencies in the marketplace and with this much variety, there are also hundreds of different mining methods. Some tokens are simply and earns interest as a normal asset in the old financial world would do so, at a certain percentage rate over time. Bitcoin, the most popular and first of the cryptocurrencies assets to change the world operates on a protocol referred to as proof of work. Proof of work has become a standard of sorts within the niche cryptocurrency industry, in part because it was the first to be deployed successfully but also because it provides powerful game theory incentives for members to partake in the network with regards to what’s also fair for the network. Another popular, but the less proven model of mining cryptocurrencies is known as Proof of Stake. This method allows holders of a particular token or asset to generate a reward for their holding of this token based on the amount they hold compared to the available in the marketplace. Let’s take a closer look at these two popular mining methods proof of work and proof of stake.

Proof of Work

As aforementioned proof of work operates the bitcoin network. This is the original peer to peer network which was created by Satoshi Nakamoto to operate the Bitcoin blockchain without a centralized authority to protect against double spending and other malicious network behavior. The system of proof of work is a requirement to define the expensive computer calculation known as mining. These computer calculations are the foundation of network as they process transactions. The network then rewards miners or those operating the computer’s to process these transactions with a reward and ensure there are proper incentives in place to make a positive network effect. Finally, the network miners also have to agree on the transactions in each block so that there are protections against malicious network activity.

Proof of Stake

One of the most common cryptocurrencies Ethereum will soon operate with the model of proof of stake. At least that is the hope to help make the network scalable in the near future. The proof of stake model is more apt to traditional growth model such as interest earned in a bank account. Proof of stake allows the creator of a new block based on the number of stakes each user hold. The proof of stake model there is no block reward and instead, new tokens are released as interests for the token holders on the network. The benefit of Proof of Stake currencies is that there is far less energy consumed in the mining process compared to the proof of work model.

Other Models

Today, there are over 2,000 cryptocurrencies which have been created for the world to use. With this, there are dozens of models which are different than the two common mining methods highlighted above. These include proof of content, proof of energy, and the list goes on and on. None of these other models have been proven to operate within a scalable system minus a few selections such as Steemit. With that, we’d love to hear your favorite mining model. Always, learn more about VenusEnergy today online at http://venusenergy.io