The last few years have seen a rise in interest in blockchain technology. They make use of several consensus techniques. The optimum option, however, has yet to be found because each consensus process had to make a compromise.
In contrast to Proof-of-work (PoW) blockchains like Bitcoin, Proof-of-stake (PoS) consensus compromises security for scalability. PoW consensus has syntactic restrictions by design since it makes PoW blockchains secure. However, it has to be more programmable for consumers to utilize it more frequently in daily tasks.
This issue is resolved by proof-of-transfer (PoX), which allows for programmability in its blockchains while preserving the security offered by the PoW blockchain.
A Deep Dive Into Proof-Of-Transfer!
Proof-of-Transfer (PoX) is nothing but an expanded version of Proof-of-Burn (PoB). It uses an established cryptocurrency with a PoW consensus method (the anchor blockchain) to build a brand-new, safe blockchain.
The anchor cryptocurrency is g0iven to the network users instead of being burnt, which is the primary distinction between PoX and PoB.
The first blockchain to use PoX as its consensus method is Stacks. It connects to the Bitcoin blockchain using PoX. It makes it possible to create smart contracts protected by Bitcoin's blockchains. As a result, it is now possible to develop NFTs and DeFi products.
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For better understanding, we will use the Stacks blockchain as an example of how PoX functions. STX is the stacks blockchain’s specific cryptocurrency, whereas BTC serves as the blockchain's anchor currency.
Let’s discover how PoX processes.
The PoX protocol uses a verified random function (VFR) after miners contribute their BTC. The highest contributor is chosen as a winner.
The winner receives a freshly created STX in addition to writing new blocks on the Stacks blockchain.
STX owners who participate by stacking their STX coins will get BTCs as rewards.
A Quick Perks Of PoX!
When checking on the advantages, it is evident that POX is beneficial in all possible ways. A few fragrances of POX are mentioned here.
There is no need for specialized hardware.
It maintains the PoW's security.
Also, it recycles energy used in PoW.
The blockchain is entirely protected thanks to these consensus protocols. There are several consensus algorithms accessible, and each has highlights and challenges. The Stacks blockchain's PoX is a groundbreaking consensus mechanism that aids in resolving any potential bootstrapping issues. Additionally, it compensates network members with rewards and sustainability.