The technology behind
Proof of Work and Proof of Transfer
In the next lines, I will try to explain to a broad audience the technology behind blockchain and digital money. Do the general people or even the programmers need to know that?
I am not addressing the expert. This is just for people interested in technology who have no previous background in it.
We are in a revolution in financial services. The world has created different cryptocurrencies, that is, digital money with no physical form (like paper or coins) and with no central authority (like states or banks.)
At the time that I write this post, the most well-known cryptocurrency is Bitcoin. The technology behind it is called Proof of Work (PoW). Bitcoin was created in 2008. It has been proven secured and spread all across the world.
Alongside Bitcoin and Proof of Work, there many other technologies which have appeared. Here I will highlight one that I think can be especially promising: Proof of Transfer (PoX).
Proof of Work (PoW) and Proof of Transfer (PoX)
Proof of Work (PoW) is the technology behind Bitcoin. The entity that requires a service in the network must do some work, which usually means processing time with a computer. The system has been proven to be very secure. At the same time, it has the drawback that it consumes many resources, and especially a lot of electricity.
I know that is quite abstract. If you do not fully grasp it, that’s ok—it does not really matter. I will explain why later. What you have to remember is that Proof of Work deters attacks and span on the network. It makes Bitcoin transactions secure.
On the other side, Proof of Transfer relies on the security and reliably of Bitcoin and provides other services on top of that. It takes advantage of the strength of Bitcoin: its safety and widespread distribution. It has all that, without the need to consume more resources.
So abstract that it is scary
All these concepts around blockchain and cryptocurrencies are complex. There are an infinite quantity of bloc posts, videos, and podcasts about them. Trying to follow all that information and its evolution, would be overwhelming. Many people feel that all this is not for them. The complexity and abstraction of the concepts can be a significant barrier to anyone who tries to approach it. Many have the feeling that all this is just for engineers and other experts.
The massive amount of information, fast change, and abstraction are barriers to making the system grow. We need a more general and public approach to the new services created around blockchain and cryptocurrencies.
Does it really matter?
I don’t think that you need to know all that. You do not need to understand the technology behind blockchain. I know that it can be controversial.
Trying to explain Proof of Work and Proof of Transfer today is like trying to explain a computer to someone 100 years ago. Or a smartphone to someone 15 years ago. The same would apply to a television, a car… People do not need to know the technology behind any of those new inventions. The regular user wants to see what problem the technology solves and how to use it. Even the engineer specialist does not fully understand the concept behind it. He needs to have clear instructions on how to repair or implement each functionality.
Even today, most people do not fully understand why television works. They know what problems it solves and intuitively understand how to use it without any instructions. That is enough, so they will not spend time to discover more. Ok, perhaps some nerds might disassemble one just for the pleasure to know more, but they are a very, very small minority.
It is ok to have a curiosity to learn more about the technology that lies behind blockchain. But if you do not fully understand it, it does not really matter. Do not feel alienated. You will understand more when you use the products and services with that technology.
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