“Virtual currency investment” 003:POW, POS, DPOS, serial POI, POA, POB.

“Virtual currency investment” 003:POW, POS, DPOS, serial POI, POA, POB.


The full name of POW is Proof of Work, which translates to “work” or “proof of work”.

The dog coins and bitcoin, Wright coins and other digital currency is based on POW mode. That is to say how much money mining reward, work effectively depends on the contribution of mining, that is to say, its performance is better, mining time is longer, the monetary reward more.

The significance of the proof of work: it forced the emergence of money, need to pay a certain amount of work and cost, which gives the commodity attribute of certain currency, the freedom of the invisible hand of the market price mechanism can spontaneously adjust the money supply, which has a stable currency value, so that the money can be obtained the trust of the people.

POW has a very good properties: from politics. From the perspective of consensus, its mathematical algorithm is simple and transparent, and completely to the center; in theory, anyone can dig and block.

But in fact, FOW also has a lot of defects, such as bitcoin, POW has become a pay to play (pay-to-play) model, is one of only to spend a lot of cost talent will add profit model.

In fact, mining with long-term capital expenditure, in order to realize their own interests maximization. In addition, POW is not environmental protection.

POW returns depend on have calculated force (or its advanced level). Is more high, to the user’s account more opportunities, therefore, is the higher mining time is longer, the more bitcoin. This undoubtedly will bring long-term and fierce competition equipment.

Bitcoin mining machine is the most expensive when hundreds of thousands of yuan, and the growth rate of electricity consumption of bitcoin mining is also very alarming.

As of January 2014, China bitcoin is less than 1P, according to IT 1 kW power consumption to calculate the consumption of less than 50 million yuan.

Chinese reached 1 billion 700 million yuan in 2016 the consumption scale in bitcoin, 2017 will increase to 2 billion 400 million yuan.

In addition, after detailed study found that: by 2020, the power consumption of the bitcoin network may reach the national Danish power consumption level.

Two: POS

POS is proof of interest or equity that is called Proof of Stake.

August 2012 little coin (PPCoin) creation, for the first time POS.

That is a model of equity holdings and according to the time of the currency, a mode to send interest.

There is a core term – currency age in POS mode: every coin every day to produce 1 old coins.

For example, you have 100 dollars, with a total of 30 days (one month), so, your age is 3000. This time, if you find a POS block, old coins you will be empty for 0.

Every time you emptied a fixed currency age, will get a reward from the block (interest) – cash interest.

For example, the first POS mode the annual interest rate is 1% and the little money, this model makes little money and has the characteristics of a completely different: the total bitcoin bitcoin 21 million is fixed, but little money has no fixed amount, it will maintain a 1% annual inflation.

Of course, is not to say that the POW mode of currency without inflation. For example, the dog currency is used in fixed annual inflation (inflation percentage value decreased year by year) mechanism.

In POS, the biggest problem is that “the rich richer”, in the POS system, the new POS has held the absolute limit capacity by POS. It is generally believed that it is an unfair model.

POS currency system must first hold POS money can earn interest, then lead to rely mainly on home to buy coins, the formation of Pyramid structure.

Such as pure POS (NXT), the future currency because the original ownership structure is written to the IPO, but also the first public offering no additional public shares, said the original shareholders but all the stock issue in theory if United control price is very easy.

So is the fact that the original shareholders only more than 20, the market mechanism is not balanced, selling price depends on large shareholders.

Three: DPOS

Authorizes warrants (Delegated Proof-of-Stake)

DPOS is authorized shares that the shareholders can influence the block (block) who have.

How to affect the shareholders?

Is to vote on behalf of. On behalf of the highest number of votes in a predetermined time all legitimate transactions will be packaged into blocks (block), and obtain the reward system.

DPOS has the advantage of faster block recognition and can be extended to VISA level 10000 times per second payment or transfer frequency.

Four: POI

POI (Proof of Importance), which proved the importance.

The POI algorithm provides a more uniform distribution of mining method. People do not need to use more powerful machines, also do not need to hold more shares to get more reward.

The economy only needs to prove their importance to obtain the reward block. It does not need special mining hardware, can run in a raspberry pie on the device, so it saves the electricity and environmental protection, greenhouse warming helps to solve the problem of headache for the high carbon emissions from the earth.

Obviously, the importance that can solve the issue of competition between the bitcoin ecosystem in substantial waste of resources and mining equipment.

In addition, the importance of that plan, money does not mean that important, it is less interested in trading volume, activity, and who do trading.

These features can remove all other drawbacks of POS system are, in that make the rich richer this cycle.

The importance that application mechanism algorithm is the most important new currency by NEM.

The importance of a NEM user depends on the amount of money and he has his wallet interaction number.

Compared with other digital currency and do not consider the support function of a node to all network.

Some of the work that mechanism only needs a large number of nodes with digital currency form blocks, for NEM, the number of monetary transmission is also a support network of factors, it will encourage users to not only hold NEM, but positive in the NEM system to carry out transactions.

Therefore, the importance of that currency, the fee is in a delicate and balanced manner decided and sent to the user.

Five: POA

POA (Proof of
Assets), that is proof of assets.

Digix through its proof of assets (POA) protocol provides examples for the use of real asset tokens and document.

Digix proof of assets (POA) audit trail records and provide the certification process of an asset in the etheric workshop, to create POA assets card.

These assets supervision from cartoon chain participants (i.e. gold suppliers, custodian and audit business) continuous digital signature authentication, digital “further by being provided and uploaded to IPFS (Star file system) permanent store purchase and storage receipt confirmation certificate.

Six: POB

POB (Proof of Burn), which burned proof

Create new blocks must create a new currency to pay. These costs will be in accordance with the regulations or the ratio of pre empty algorithm conversion to the new currency.

Contract currency (XCP) is produced by burning bitcoin.

Seven: digital currency and algorithm

Proof of purchase (Proof-of-Purchase)

Time (Proof-of-Time)

Proof of identity (Proofof-Identity)

Mixed (Combining Proofs), that is not to detail.

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