Ethereum: How are ‘Not Mineable ‘ cryptos able to verify transactions?

The Verdict: How “Non-Minable” Cryptocurrencies Verify Transactions

In the cryptocurrency world, some projects are shrouded in mystery by the “non-minable” designation. This term refers to cryptocurrencies like NEM (Nxt), Stratis, and BitShares that don’t rely on traditional mining processes. Instead, they use alternative consensus mechanisms to validate transactions and secure their networks.

So, how do these non-minable cryptocurrencies verify transactions? Let’s get into the details.

The Role of Nodes

In a cryptocurrency network, nodes are the computers that store and validate transactions. They act as intermediaries between users and the blockchain, ensuring that transactions are processed correctly and securely. In non-minable projects, nodes typically serve several purposes:

• Verification: Nodes verify transactions by checking their validity against the rules and regulations of the network.

• Consensus: Nodes help maintain consensus on the blockchain by voting on new blocks (or in some cases “chains”).

• Staking: Some non-mineable projects require node owners to “stake” their coins or assets, thereby ensuring control and incentivizing participation.

Alternative Consensus Mechanisms

Non-mineable cryptocurrencies use a variety of consensus algorithms to validate transactions. These are:

• Proof-of-Work (PoW)

  

  : One of the most well-known consensus algorithms, PoW requires miners to solve complex mathematical problems to validate transactions. While widely adopted in the industry, it is energy-intensive and has been criticized for its environmental impact.

• Proof-of-stake (PoS): This consensus algorithm is also known as “decentralized governance.” Instead of requiring miners to compete for validation, PoS uses a voting system where nodes vote on new blocks. This approach can be more energy-efficient and environmentally friendly.

Staking and Governance

In non-minable projects, investment often plays a crucial role in maintaining the security of the network and incentivizing participation. For example:

• BitShares: The BitShares ecosystem uses a decentralized governance token (BCH) to facilitate voting on block reward distribution proposals.

• NEM: NEM’s “NXT” protocol allows users to stake their coins and participate in the validation process, earning rewards in the form of NXT tokens.

Conclusion

While non-mineable cryptocurrencies like NEM, Stratis, and BitShares may seem mysterious at first, they rely on alternative consensus mechanisms and nodes to verify transactions. Understanding these concepts can help us appreciate the complexity and nuances of cryptocurrency networks.

In the future, as the industry continues to evolve, it will be interesting to see how traditional mining processes give way to more energy-efficient, environmentally friendly alternatives such as PoW and PoS.

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