Ethereum Staking: What Does It Mean For Business?
One of the biggest pieces of blockchain news of 2020 took a while, and as of December 1, it took its first major step of translation from proof of work to proof of stake. Ethereum 2.0, which brings forth several notable improvements to Ethereum, is ready to make an impact. The most significant change is moving from a proof of work mechanism to a proof of stake. Some expert sources have been calling this one of the most significant developments for blockchain’s future since 2018. Why? And what does that mean for businesses?
What is proof of stake?
Proof of stake is an alternative to the somewhat more traditional proof of work consensus mechanism. Even those with no blockchain knowledge have probably heard the term “mining” before. Mining refers to the proof of work consensus mechanism and a computer’s ability to put in the work and provide the computing capacity needed to complete any blockchain transaction (buying, selling, application usage, etc.). For Bitcoin, users are rewarded for providing their computing power with cryptocurrency, hence the term “mining for Bitcoin.” Proof of stake, alternatively, looks at a user’s amount of currency or “stake” in the blockchain in order to validate blockchain transactions, then rewards that user for how much they “staked” on the transaction.