Cryptocurrency forging - an alternative to mining
When mentioning the generation of new coins, immediately there are associations with mining and huge hangars of mining equipment. In fact, mining is not the only way to create new cryptocurrency units - there is also such a concept as cryptocurrency foraging. What exactly is this? Let's find out in this article.
- CRYPTOCURRENCY FORGING: WHAT IS IT?
The very concept of forging comes from the English word forging, which means "forging". If we consider this phenomenon in the plane of cryptocurrencies, it means the creation of new blocks by confirming the ownership share of a certain monetary mass of the network with the possibility of receiving a reward in the form of a commission for transactions.
Any cryptocurrency that is based on the Prof-of-Stake algorithm, as well as its derivatives, can be mined using the foraging method. The idea is that the one who owns more coins has the biggest chance to add the next block.
To make things clearer, let's turn to an example. Let's assume that we have two miners, Satoshi and Vitalik, who decide to start foraging. Satoshi has 10 coins in his account, and Vitalik has 8 coins. As in the case of mining, the one who has more of the required resources, in this case, coins, has a better chance of adding a new block and receiving a reward. Accordingly, it is more likely that Satoshi will be able to add the next link in the blockchain.
- CRYPTOCURRENCY FORGING: BENEFITS
Let's understand, why cryptocurrency foraging is better than mining.
Energy Efficiency. Unlike mining, foraging eliminates the need to assemble large farms, which consume a huge amount of electricity and generate a lot of heat.
Affordability. You don't have to have a large amount of money in your account to forge some coins. In mining, however, it will be quite difficult to do without expensive equipment.
Low entry threshold. If you need not only money to build a farm, but also the appropriate knowledge, for mining it does not matter. All that is required from the one who wants to "forge" - the presence of a purse and the necessary amount of money.
Of course, there is a disadvantage to this method of coin mining - most cryptocurrency networks require quite large amounts of money to participate in foraging.
- CRYPTOCURRENCY FORGING: WHICH COINS SUPPORT THIS TYPE OF GENERATION?
The PoS algorithm-based foraging method itself was first applied to a cryptocurrency called PPCoin (now PeerCoin) in 2012. Today, the list of coins that work with proof of ownership is quite extensive:
Often cryptocurrencies use two methods of generation at once - PoW and PoS. These include EmerCoin, YaCoin, NovaCoin. There are also cryptocurrencies where both algorithms are used at different stages. For example, PeerCoin and Reddcoin use PoW to generate new coins and PoS to confirm transactions.
- CRYPTOCURRENCY FORGING: IS IT WORTH "FORGING" COINS?
Many are quite skeptical about PoS mining, arguing that it is not profitable and cannot be considered as a source of income. Others, on the contrary, are sure that it has a future. In general, it is up to you which way to mine coins. Is it possible to buy a mountain of equipment with high power? Then welcome to mining. No such opportunity or desire? Then foraging is your option. Note that no one forbids you to do both PoS and PoW mining at the same time!