Welcome back to another edition of DevSpeak! In this series, we’re all about filling you in on the basics of terms you’ve probably heard tossed around in tech circles without fully understanding what they mean. Today, we’re diving into one that’s been around a while but is still causing its fair share of confusion – cloud computing!
Imagine you’re organizing a huge event. You could either buy everything yourself—chairs, tents, catering equipment—or you could rent all of these items for the day, using them only as long as you need, and then return them. This is more or less how cloud computing works for businesses and individuals in today’s world.
Cloud Computing, Defined
At its core, cloud computing is the delivery of computing services such as storage, processing power, databases, and software over a shared connection, often referred to as “the cloud.” Instead of owning physical hardware or software on your premises, you access and use these resources online, typically through a service provider like Amazon Web Services (AWS), Microsoft Azure or Google Cloud.
Think of cloud computing like using electricity. You don’t need to own a power plant to run your lights, fans, or electronic gadgets. You simply plug into an outlet and pay for the amount of electricity you consume. Similarly, cloud computing lets you “plug into” vast computational resources and only pay for what you use without owning any of the underlying infrastructure.
While this cloud connection typically happens over a standard internet connection, providers typically create permissioned and secure ways to access resources.
The Silver Linings of the Cloud
There’s lots of ways that the idea of the cloud has been amazingly beneficial in people’s lives. We often don’t even think about all the ways we interact with cloud services today, even though many things we do are facilitated by cloud computing under the hood.
Cost Efficiency
Using the cloud means you may not have to buy expensive hardware or software upfront.
Imagine a startup needing 100 powerful servers for just one week to run some tests. Buying 100 servers would be incredibly expensive, and those servers might sit unused afterward. Instead, they can rent these servers in the cloud for the short time they need them and save a lot of money.
Scalability
Let’s go back to our party example. Oh no! More guests showed up than expected! You’ll have to scramble for more chairs, tables, and food.
In traditional computing, if your website traffic unexpectedly spikes, you’d need to buy more servers – expensive and time consuming. With cloud computing, however, resources can scale automatically. If your needs grow, you can instantly be allocated more computing power or storage from the cloud. Similarly, if traffic drops, you only pay for the reduced amount of resources used without having bought extra servers you don’t need anymore.
Flexibility
When all the tools are yours, your flexibility is limited to your toolkit.
Cloud computing allows businesses to be flexible in how they use their resources. If your project requires more computational power for a short period, you can ramp up easily without complicated logistics. If you need less, you can scale back. No long-term commitments are required, and there are enough cloud providers out there that they have an interest in keeping their customers happy.
Accessibility
Physical servers are in a place, and setting up secure ways to access your resources anywhere you want is complicated and a potential security risk. The cloud is already set up for this.
The cloud allows you to access files and applications from anywhere in the world, as long as you have an internet connection. No matter where you are, you can access the tools you need.
The Darker Side of the Cloud
While cloud computing has plenty of benefits, it’s not without its downsides.
Security and Privacy Concerns
When you rent something, you don’t have full control over it. You have to trust whoever does have full control over it.
When you store your data on someone else’s servers (in the cloud), there’s a risk of breaches or data leaks. While cloud service providers invest heavily in security, they can still be targeted by hackers. Not all cloud services are equal – look carefully at the ToS on a cloud provider and make sure you’re comfortable with the level of access they themselves have to your data.
Downtime and Outages
Back to the party example — delivery truck is stuck in traffic. Nothing you can do. You’ll have an event without seating for a while.
Even large cloud providers experience outages. If their systems go down, you could lose access to your tools and resources. It’s worth noting that they typically will know what they’re doing and work hard to fix problems. Being out of control can be hard, however, and with cloud services you’ll have to accept that there may occasionally be issues that are out of your hands.
Ongoing Costs
While renting might save you money upfront, long-term rental fees can add up. For some businesses, using the cloud can become more expensive over time than buying your own resources.
Cloud services do what they do because they’re trying to make money. Expanding your own infrastructure can save you money in the long run, so it’s important to make sure that cloud computing you use is mutually beneficial.
Vendor Lock-In
One more visit to the party example. Let’s say that delivery truck does show up, but they brought double the tables and no chairs! At this point, it’s tough to get another truck from another company out there without sending away the one that has the rest of your party supplies… even if minus chairs.
Switching between cloud providers isn’t always simple. Each provider has different systems, and moving your applications and data from one to another can be time-consuming and costly. It’s best to do research on any cloud provider you work with an ensure that you’re pretty likely to be happy with their service.
Parting the Clouds
Cloud computing has revolutionized the way we think about accessing and using digital resources. By making powerful tools available over the internet, the cloud has changed the way both businesses and individuals interact with the digital world. However, like any technology, it comes with trade-offs – just because something can be handled on the cloud doesn’t mean it always should.
Much like renting versus owning, cloud computing allows companies and individuals to use what they need when they need it, without the hefty upfront cost. The functionality that these services have unlocked across the whole of the internet has opened up new ways to build, collaborate and navigate life.
That’s it for today, but we’ll be back soon with another DevSpeak!
Stablecoins have emerged as an important part of the web3 world, playing a crucial role in providing financial stability to a typically volatile cryptocurrency market. For those new to blockchain and crypto, stablecoins might seem like a complex concept, but they’re actually quite simple.
Think of them as a “digital version of the dollar” or other traditional currencies, designed to maintain a steady value rather than fluctuating like Bitcoin or Ethereum. In this blog, we’ll break down the concept of stablecoins, why they exist, how they work and their importance in the growing web3 world.
What Are Stablecoins?
A stablecoin is a type of cryptocurrency that is pegged to the value of a stable asset, typically fiat currencies like the US dollar or Euro. Unlike Bitcoin, which can experience dramatic price swings, stablecoins aim to stay steady. It should be noted however that no financial asset is perfectly stable, but stablecoins are comparatively stable to most cryptocurrencies.
Imagine you’re traveling to a foreign country and you exchange your money for local currency. When you return home, you expect your leftover foreign currency to hold roughly the same value. This is the idea behind stablecoins—they are designed to ensure your digital assets don’t lose value overnight, especially in the often volatile cryptocurrency world.
Why Do Stablecoins Exist?
Cryptocurrency is known for its wild price swings. Bitcoin, for example, can rise or fall by thousands of dollars in just a day. While this can be exciting for traders, it’s risky for businesses and individuals looking for stability. Enter stablecoins—designed to minimize this volatility by pegging their value to more stable assets.
Here’s why stablecoins are essential:
1. Price Stability for Transactions:
In a world where cryptocurrencies are becoming more common as payment methods, having a stable unit of currency is vital. Imagine buying a coffee for $5 worth of Bitcoin in the morning, only for that Bitcoin to lose value by the time your payment processes. With stablecoins, the value of your purchase remains consistent, making them ideal for everyday transactions. Depending on many variables (complexity, blockchain, amount), web3 transactions can take time. Vendors must rely on knowing that the price paid for a product or service is consistent with their asking price, even if the purchase takes a variable amount of time to fulfill.
2. Cross-border Transactions:
Traditional banking systems often charge high fees for international transfers and can take days to process. Stablecoins make cross-border payments faster, cheaper and easier. Since stablecoins are based on blockchain technology, you can send money across the world in minutes without worrying about the value changing dramatically during the process.
3. DeFi (Decentralized Finance) Applications:
Stablecoins have become an integral part of the decentralized finance (DeFi) ecosystem, where people can lend, borrow and trade assets without relying on traditional banks. In these systems, having a stable currency to work with makes it easier to manage risks and avoid the extreme price swings common in other cryptocurrencies.
How Do Stablecoins Work?
There are a few different types of stablecoins, each using different methods to maintain their stable value. Here are the three main types:
1. Fiat-collateralized Stablecoins:
These stablecoins are backed by actual reserves of fiat currency (like US dollars) held in a bank. For every stablecoin issued, there’s an equivalent amount of fiat currency sitting in reserve. One of the most popular examples is Tether (USDT), which is pegged 1:1 to the US dollar. So, for every USDT in circulation, there should be a dollar in reserve.
Example: If you have 100 USDT, theoretically, the company behind it holds $100 in a bank somewhere to back up your digital assets and allow your tokens to maintain their precise value.
Instead of being backed by fiat money, these stablecoins are backed by other cryptocurrencies, often over-collateralized to account for the volatility of crypto. This means for every $1 of stablecoin, there might be $2 worth of cryptocurrency backing it. DAI, created by the MakerDAO platform, is a well-known example of a crypto-collateralized stablecoin.
Example: If you want to create $100 worth of DAI, you might have to lock up $200 worth of Ethereum. If the price of Ethereum falls, the system will liquidate your assets in order to keep the value stable.
These stablecoins are not backed by any collateral. Instead, they use algorithms to control their supply, automatically increasing or decreasing the number of tokens in circulation to maintain a stable value. When the demand for the stablecoin rises, the algorithm issues more coins to bring the price down. If demand falls, the supply is reduced to increase the price back to its pegged value.
Example: TerraUSD (UST) was one of the more well-known algorithmic stablecoins before it collapsed in 2022 due to its inability to maintain its peg to the US dollar, highlighting one of the most important risks associated with this type of stablecoin.
Stablecoins have become indispensable in the broader Web3 ecosystem because they serve as the bedrock for many financial activities on the blockchain. Here’s why:
Liquidity and Trading
Stablecoins are often used as a medium of exchange on decentralized exchanges (DEXs). Traders use stablecoins to quickly move in and out of more volatile cryptocurrencies like Bitcoin or Ethereum without needing to cash out into traditional fiat currencies.
Decentralized Finance (DeFi)
DeFi platforms rely heavily on stablecoins. Lenders and borrowers use stablecoins as collateral, ensuring that their loans or savings won’t lose value overnight due to market volatility.
Onboarding to Crypto
Stablecoins offer a familiar value system for people new to crypto. Instead of having to understand complex pricing of volatile assets, newcomers can start by using a digital currency that mirrors traditional money.
Safety from Market Crashes
During significant market downturns, investors often convert their holdings into stablecoins to protect their portfolios. This acts like a “safe haven” during turbulent times.
Popular Examples of Stablecoins
Let’s take a look at some of the most widely used stablecoins in the cryptocurrency space:
Tether (USDT): The largest and most popular stablecoin, pegged to the US dollar.
USD Coin (USDC): A highly regulated stablecoin backed by US dollar reserves, known for its transparency.
DAI: A decentralized stablecoin backed by crypto assets, primarily used in DeFi applications.
Because of their proven stability, both USDT and USDC are accepted as payment methods for many products sold in the Gala ecosystems. Additionally, payments are also accepted in both GUSDT and GUSDC, the GalaChain-bridged versions of these Ethereum-based stablecoins.
Each of these stablecoins offers unique benefits depending on the use case—whether it’s transparency, decentralization, or regulatory compliance.
Stablecoins are the unsung heroes of the cryptocurrency world, bringing much-needed stability to a notoriously volatile market. They are an essential bridge between the traditional financial system and the world of Web3, facilitating everything from day-to-day transactions to more complex decentralized financial activities. Whether you’re new to blockchain or a seasoned crypto trader, stablecoins play a pivotal role in making digital assets more accessible and usable.
Welcome back to another DevSpeak, where we decode the often confusing language of developers in a way that you can understand. Speaking of decoding, today we’re diving into a concept that is entirely ubiquitous in the web3 world… but not often understood. Today we’re diving into encryption!
If you’ve heard the term but are unsure what it really means, you’re not alone. Let’s break down what people mean when they say “encryption” and explore why it’s crucial for your digital safety.
Encryption, Defined
Encryption is a method of converting plain, readable information into a coded format that only authorized parties can decipher. If bad actors intercept your data, it’s gibberish to them without the proper cipher. Security measures use complex algorithms to ensure reliable encryption of information.
This isn’t just a process computers can do – you’ve probably encountered the idea of ciphers and code before in entertainment or history even if you don’t have super secret coded messages to send around.
You use a set of rules to replace each letter with another symbol or letter. To anyone who doesn’t know the code, the message looks like a jumble of symbols. But if you have the cipher, you can easily decode the message and read it as it was originally written. That’s the essence of encryption.
Remember these puzzles from newspapers? Classic encryption problems!
This is an old, old practice. In fact, one of the most classic examples of this is Cesarian Code, a method reportedly used by Julius Cesar to send coded messages to his legions.
In this method, you move each letter back three positions in the alphabet, revealing the true letters. While this method is obviously not secure after kicking around for 2100 years, there are many variations that are still used in manual ciphers today.
When the Fuzzles were lost in the wormhole in 2022, they used a slightly modified version of the Cesarian cipher to communicate with Earth! For extra security and interplanar transmission strength, they altered the amount of position offset and converted the entire message to binary.
Why Encryption
So, why is encryption so important? The primary reason is privacy and security. Every time you send an email, make an online purchase, or log into your bank account, your personal information is transmitted over the internet. Without encryption, this data could be intercepted and read by cybercriminals, leading to identity theft, financial loss, or other serious breaches of privacy.
Consider that when you shop online, for instance, you’re entering sensitive details like your credit card number and home address – that info is being sent from your computer to a server somewhere else, then probably to a datacenter in an entirely different location! If the website you’re using doesn’t employ encryption, those details could be easily stolen by someone who’s able to intercept the data transmission. Encryption ensures that even if someone tries to steal your information, it’s unreadable without the decryption key.
Encryption also plays a crucial role in securing communications between individuals and organizations. When you use messaging apps or email services that offer end-to-end encryption, only you and the intended recipients can read your messages – they aren’t accessible by any other party during transmission. This makes sure there’s confidentiality in conversations.
Not All Encryption is Equal
It’s important to know that not all encryption is created equal. In the most basic sense, there are two main types of encryption. Their effectiveness can vary based on how they’re implemented.
Symmetric Encryption: This method uses the same key for both encrypting and decrypting information. It’s like having a single key to lock and unlock a diary. It’s fast and efficient, but the main challenge is securely sharing the key between parties. If the key is intercepted, the encryption is useless.
Asymmetric Encryption: This method uses a pair of keys—a public key and a private key. The public key encrypts the information, while the private key decrypts it. This approach is like having a public lock that anyone can use to securely send you a message, but only you have the private key to unlock it. This method enhances security, especially in scenarios where secure key exchange is challenging.
Sound familiar? We dove into the details of symmetric vs asymmetric encryption in our second article in The Guardian Papers!
While encryption is a powerful tool, it’s not foolproof. The security of encrypted data depends on the strength of the encryption method, the management of encryption keys and the overall security practices you use to protect your data.
Frqfoxvlrq
In a world where our personal and professional lives are increasingly dependent on digital security, a basic understanding of encryption is more important than ever. Encryption is constantly protecting your activity every day!
Uh oh, did we leave the heading encrypted? Your first test begins!
The details of how encryption works can be complicated in practice, but the basic why and how of this practice are easy to understand. It’s about safeguarding your privacy and ensuring that only you and those you choose to share your information with can access your data.
Hopefully this DevSpeak gave you enough insight to not be totally lost the next time you go out on the town with your techy friends. We know that not everyone is or will be a tech expert, but understanding the basics of these concepts is important to not only use technology to its full potential, but also prepare you for the next wave of advancements!
Let’s all be ready for the world of tomorrow together!
Imagine that you were a scammer trying to target a particular group of people… let’s say people who like to spend their days at the lake relaxing with a fishing pole hanging in the water. Who knows why – maybe you are trying to sell counterfeit lures? Coordinate putting out some AI-enabled fishing rod that’s collecting fingerprint data while they laze their days away? Motivations are rather inconsequential for this example.
You could pay for a big list of dark web data, but you could also just insert yourself into that community. You can hop on message boards, join chat groups, heck you could even go hang around local bait shops. Before long, you’ve got a lot of useful demographic data on people that are part of that group. Maybe all you have is some emails and IP addresses… but that’s enough to start refining your list and getting more information.
The same is true with Discord. The Gala community is a great place for the latest news and robust conversation about every aspect of the Gala Ecosystem. The popularity and richness of social connections that are forged on our Discord server or Telegram channel, however, also make them a popular destination for another type – scammers. It’s important to know and understand the tactics of these digital miscreants to keep your digital assets safe while still participating in any digital community.
Welcome to the 8th installment of The Guardian Papers, where we try to impart the wisdom that everyone should have to start a successful journey through the world of digital ownership. The blockchain world is still in its infancy. We here at Gala believe that empowering each and any member of our community makes us stronger as a whole.
Miss an issue of the Guardian Papers!? Check out past editions below!
It is our hope that this series has and will continue to present foundational information that will not only provide a base understanding of how to keep your blockchain footprint secure, but will also help inform your journey through this digital adventure so you can ask better questions, do better research, and make better decisions to help guard your entire community.
The Dark Side of Community
Discord was originally made for gamers. As the scope of the platform has grown to include countless massively popular communities, however, it has also attracted the riffraff that stalks digital space for the opportunity to steal from the unwitting. Because Discord servers categorize people into common interests, it’s easy for scammers to get inside groups and represent themselves as just another member – or even an authority figure – within that community.
The same is true for Telegram or other messaging apps where people commonly gather in like-minded groups. In these spaces, the community itself has already done the work to compile victims for all the villains in the cryptoshadows. Communities are welcoming because that’s the point of community. By simply being in these groups, however, you’ve done part of the scammers research for them… they know that you are part of their target audience.
Make sure you customize your privacy settings in Telegram… or else you’re about to get a whole hornet’s nest of attention from all the wrong people!
Community messaging apps like Telegram and Discord are third-party platforms that are utilized by Gala, but these can have their own security issues that are simply beyond any community’s ability to control. The scammers thoroughly know the shortcomings of these apps, and can exploit them to attempt to scam thousands of members of a community within minutes. Even one success will show them this pond is well-stocked with easy catches for their future fishing endeavors.
Any community where the digital villains see opportunity isn’t going to get rid of them without a fight, however. We can only turn the tide against the scammers by making sure that each and every one of us is ready to defend against them.
Don’t forget to customize your exceptions as well! By default, any member of Telegram’s premium subscription can contact you regardless of your settings 😱
Don’t forget to customize your exceptions as well! By default, any member of Telegram’s premium subscription can contact you regardless of your settings! 😱
How Scammers Prey on Communities
It’s hard to build and feel community if you’re always suspicious of your neighbors. The scammers are counting on this, because that’s not how defenses work. When you perceive yourself as ‘among friends’ your defenses naturally go down. You want to be helpful – after all, that’s what building community is all about.
That’s why they’re here. Community is a group trust that we build up over time with likeminded people. We can’t simply turn it off and on. It’s not like we recognize every member of the community, we just recognize that they are part of the community.
We’ve discussed impersonation before, so you’re all very well aware that there are people out there who will pretend to be Gala customers or community support. You need to stay vigilant for these types of things… these apps are where the scammers find their marks.
This isn’t to say that community itself is bad. In fact, it’s very very good. Community standards and best practices are how we combat these scammers. Building a community is too important to let scammers stop us. We have to build a better community to make it outlast the villains.
Trust is Earned
Just because someone is part of your community does not mean they’ve earned trust, and it’s not an insult to tell them so. Caution is admirable… and part of the point of web3 is to establish systems that don’t rely on trust.
First off, please adjust your privacy settings on Telegram, WhatsApp, Discord or similar apps if you have not. In Telegram, for instance, you can be contacted by anyone by default. If you don’t change that it’s only a matter of time before you are getting blown up with spam and scams. Similarly WhatsApp will show your personal phone number to anyone who comes looking if you don’t change the security settings… make sure to get this done or you’re wide open to an attack from a crytpovillain.
Even on Discord you can customize your security settings to control who can reach out to you. As we’ve discussed before, don’t trust a display name… that can be easily changed. Put people you trust on your friends list. Consider changing your settings so friends can message you. That way any new friend requests are where you know you need to be vigilant, and anyone on your friends list has already been vetted.
Trust, but verify
-Old Russian proverb
Don’t trust these security measures to be the end all be all of your defenses, however! People can get hacked or lose access to their accounts. Sometimes the attack could come from someone you know… albeit not them actually sitting in front of their keyboard.
Community Strong
With so many threats among communities you trust, the fight against bad actors in digital spaces can seem hopeless. Fortunately, community is also the cure to this malady.
⬆️ Not a great way to seek help from the community. Not only does anyone watching now know this user’s needs, but also their urgency. I bet their DMs blew up.
⬅️This is a great way to utilize the knowledge of the community. Tons of eyes can get on the deceptive scam attempt right away to verify if it’s legitimate or not. HINT: This one was not legitimate.
No one person can be entirely vigilant all the time. We get tired. We get distracted. Our guard comes down for a moment here and there… and that’s when attacks happen. Talk to your community. Educate each other and call out the tactics that scammers are using so that everyone can learn to avoid them. Alone an attack is inevitable. Together we’re strong.
If you see something sus, reach out! Ask the community you trust whether you should be engaging. Don’t be embarrassed. A simple question could save you a lot of hassle.
Guarding Each Other
When we work together, the community really shows its strength. Those who seek to exploit communities of common interests in the web3 space are counting on us not following through with our commitment to a solid community. If a victim doesn’t use the community resources at their disposal to help themselves, what can a community do to help?
That’s why it’s so important to share tips and educate fellow community members about security culture. If we all get a little better at spotting bad actors, we’ll all be a little less likely to get scammed. If we all get a little better and share a little more of that culture with each other, we’ll be exponentially more protected from those who seek to do us harm.
That’ll do it for this week’s Guardian Papers, but we’ll be back! Next time, we’ll be breaking down multi-factor identification and how it can help protect your digital sovereignty in this new age.
Stay safe Galaxians… and always have your shield ready!
Proof of Stake (PoS) is a consensus mechanism used in blockchain networks to validate transactions and create new blocks.
Unlike the Proof of Work (PoW) system, which relies on computational power to solve complex mathematical problems, PoS selects validators based on the number of tokens they hold and are willing to “stake” as collateral.
Simplifying Proof of Stake
Imagine a school raffle where students can buy tickets to win a prize. The more tickets a student buys, the higher their chances of winning. However, if a student is caught trying to cheat by using fake tickets, they lose all their tickets and are banned from future raffles. This is similar to how PoS works: the more coins you stake, the higher your chance of being selected to validate transactions, but you risk losing your stake if you act dishonestly.
One of the primary advantages of PoS over PoW is its energy efficiency. PoS does not require miners to use vast amounts of electricity to solve puzzles, making it a greener alternative. This will be explored below in greater detail.
Security and Decentralization
By requiring validators to put up their own funds, PoS aligns the interests of validators with the network’s security. This typically ensures that validators have a level of financial commitment to the blockchain proportional to the weight of their validating actions.
Validators are incentivized to act honestly because they risk losing their staked coins if they attempt to cheat the system. This mechanism helps maintain decentralization, as it lowers the barrier to entry compared to PoW systems, which often require expensive mining hardware.
Scalability
PoS systems can handle more transactions per second (TPS) compared to PoW systems. This increased scalability is crucial for the broader adoption of blockchain technology, as it allows networks to support a growing number of users and applications without compromising performance. Proof of Stake is the main reason that newer blockchains than Bitcoin have been able to implement a transactional approach for a wider variety of activities. When more transactions are possible, the blockchain can be used as more than a simple ledger that keeps track of token transfers.
In PoS, validators are chosen to create new blocks based on the number of coins they have staked. To become a validator, one must lock up a certain amount of cryptocurrency in the network. This locked-up amount is known as the “stake,” and the action of locking these tokens is generally referred to as “staking.”
Validator Selection
In a typical Proof of Stake system, validators are selected randomly, but the likelihood of being chosen is proportional to the amount of stake they hold. This process is often compared to a lottery, where each coin staked acts like a lottery ticket—the more tickets you have, the higher your chances of winning.
Once chosen, a validator checks the transactions within a block to ensure they are legitimate. Once the validator correctly validates the block they receive a reward, usually in the form of additional cryptocurrency. If they validate a fraudulent transaction, they lose a portion of their staked coins, a process known as “slashing.”
Consensus
Other validators in the network then verify the block. If most agree that the block is valid, it is added to the blockchain. This collective verification process ensures the integrity and security of the blockchain.
Advantages of Proof of Stake
Reduced Centralization
PoS reduces the risk of centralization found in PoW systems, where mining power can become concentrated in the hands of a few entities with the most powerful hardware. In PoS, even those with smaller amounts of cryptocurrency can participate in the validation process, promoting a more distributed network.
Lower Barriers to Entry
Becoming a validator in a PoS system typically requires less initial investment compared to the hardware and energy costs associated with PoW mining. This accessibility encourages more participants, enhancing the network’s decentralization.
Economic Incentives
Validators earn rewards in the form of transaction fees and newly minted coins. This economic incentive aligns validators’ interests with the health and security of the network, as they have a financial stake in its success.
The Energy Efficiency of Proof of Stake
Why Proof of Work is Energy-Intensive
Proof of Work (PoW) requires miners to solve complex mathematical puzzles to validate transactions and create new blocks. This process, known as mining, involves a significant amount of computational power. As miners compete to solve these puzzles, they use large amounts of electricity to power their specialized hardware, leading to substantial energy consumption. This is particularly true for major cryptocurrencies like Bitcoin, where the difficulty of these puzzles increases over time, demanding even more computational resources and energy.
Proof of Stake (PoS) eliminates the need for energy-intensive mining. Instead of solving complex puzzles, validators are selected based on the number of coins they hold and are willing to stake. This selection process requires minimal computational power. Here’s why PoS is more energy-efficient:
No Complex Calculations: PoS does not rely on solving complex puzzles, which are the primary driver of high energy consumption in PoW systems.
Reduced Hardware Requirements: PoS validators do not need powerful, energy-hungry hardware to participate in the network. Standard computers can serve as validators, significantly lowering energy usage.
Fixed Energy Use: The energy consumption in a PoS system is relatively constant and low, regardless of the number of validators, as it primarily involves basic computational tasks rather than intensive calculations.
Scalability: PoS systems can scale more efficiently than PoW systems. As the network grows, adding more validators does not proportionally increase energy consumption.
On GalaChain
GalaChain is built on Hyperledger Fabric, using a hybrid consensus model which includes Proof of Stake.
To learn more about how GalaChain is built or to explore the possibility of developing a project of your own on this speedy, scalable and secure L1 blockchain, check out GalaChain’s SDK or apply as a Creator at the Gala Creators Portal.
Real-World Impact
The transition from PoW to PoS can lead to a dramatic reduction in the energy footprint of blockchain networks. For example, Ethereum’s shift to PoS with its Ethereum 2.0 upgrade is expected to reduce the network’s energy consumption by over 99%. This makes PoS a more sustainable and environmentally friendly option, aligning with global efforts to reduce carbon emissions and promote green technologies.
Proof of Stake represents a significant evolution in blockchain technology, offering solutions to many of the challenges faced by Proof of Work. Its energy efficiency, scalability, and economic incentives make it a compelling choice for new blockchain projects. As the web3 ecosystem continues to grow, PoS will likely play a crucial role in ensuring secure, efficient, and decentralized networks.
