Blockchain technology has undergone significant changes since the launch of Bitcoin 15 years ago. The most notable shift has been the transition from Proof-of-Work (PoW) to Proof-of-Stake (PoS) consensus algorithms, which has reshaped how blockchains operate. This article explains how these consensus mechanisms work, why they evolved, and why most modern blockchains, including TON, have embraced staking as the future of crypto.

Understanding Decentralization in Blockchain

Bitcoin was designed as a decentralized network, where no single entity has control. Instead of relying on a central server, it uses a peer-to-peer system where all participants share equal responsibilities in securing the network.

This decentralization makes Bitcoin resistant to attacks and prevents any single point of failure. However, achieving this requires a consensus algorithm—a system that allows all participants to make decisions collectively.

The Role of Consensus Algorithms in Blockchain

A blockchain's consensus algorithm is like a voting system. Imagine a group of friends deciding on a movie—each person votes, and once a majority agrees, the decision is made.

Similarly, blockchains use algorithms like PoW or PoS to ensure that all participants in the network agree on the state of the blockchain. The goal is for the network to function as a whole, even though it is decentralized.

How Proof-of-Work (PoW) Blockchains Operate

In a PoW system, nodes (or miners) validate transactions by solving complex computational puzzles. This process, known as mining, requires significant computational power and energy consumption.

Miners are rewarded with crypto for securing the network. In Bitcoin's case, the reward is 3.125 BTC (worth around $190,000 at the time of writing). Mining ensures that the blockchain remains secure, but it also leads to high energy costs, making it less sustainable in the long term.

The Cost of Mining: Why PoW Requires Significant Investment

Mining involves guessing numbers at high speeds, and the process demands powerful computers called ASICs (Application-Specific Integrated Circuits). These devices are designed solely for mining and consume substantial electricity. Mining pools, groups of miners who share resources to improve their chances of success, have become common. Over time, mining pools have expanded beyond just mining, offering users wallets, savings accounts, and even decentralized exchanges.

The Risks of a 51% Attack in PoW Blockchains

A key risk with PoW is the 51% attack, where an entity controlling more than half of the network's computational power can manipulate the blockchain by validating fraudulent transactions. Although such an attack is theoretically possible, the cost of executing one on a major network like Bitcoin is prohibitively high—estimated at around $81 billion.

Can You Mine TON?

Originally, TON (The Open Network) was based on a PoS system, while using PoW mining mechanism for initial token distribution.

During its PoW phase, TON rewarded miners with massive returns, visible in its staking APY (Annual Percentage Yield) historical chart. Today, mining is no longer available to earn rewards on TON. By staking Toncoin with services like Tonstakers, users can earn rewards without the need for expensive hardware or high electricity costs.

Why Proof-of-Stake is the Future of Web3 Staking

Ethereum's decision to move from PoW to PoS in 2022 was driven by two main factors: energy consumption and scalability. PoW-based cryptocurrencies consume vast amounts of electricity, with Bitcoin's energy usage comparable to that of entire countries like Poland. In contrast, PoS does not rely on mining and is more energy-efficient. Moreover, PoS blockchains offer more predictable block creation times, reducing delays and increasing throughput.

The Shift to Web3 Staking: Earning in Crypto Without Mining

The shift to Proof-of-Stake marks a new era for crypto users, allowing them to earn rewards through crypto staking rather than mining. By staking their assets, users can participate in securing the network and receive crypto staking yield in return. For those interested in earning in Web3, staking is the safest way to earn in crypto, offering consistent rewards with minimal energy consumption.

Key Benefits of Proof-of-Stake Over Proof-of-Work

• Energy Efficiency: PoS requires far less electricity than PoW mining, making it more environmentally friendly.

• Lower Entry Barriers: With PoS, anyone can participate in staking, unlike PoW, which requires expensive mining equipment.

• Predictable Staking APY: The staking APY in PoS systems is more stable and less volatile than the rewards from PoW mining.

• Scalability: PoS supports faster block times and higher transaction throughput compared to PoW systems.

Conclusion: The Future of Earning in Crypto with Staking

Proof-of-Work served as the foundation for the first generation of blockchains, proving that decentralized systems could be both secure and profitable. However, as blockchain technology evolved, Proof-of-Stake emerged as the preferred consensus algorithm, especially for Web3 projects looking to minimize energy consumption and maximize scalability.

With staking, users can earn rewards through crypto staking, tapping into the full potential of Web3 without the need for expensive mining operations. For those seeking the safest way to earn in crypto, staking offers an attractive alternative, with crypto staking yield providing consistent returns in a sustainable and secure manner.