What's The Deal With DPOS: Delegated Proof of Work

At the time of Bitcoin’s creation, the algorithm that ensured a prevention of control in the hands of an individual entire or a group was known as proof of work. To accomplish its aim it had to ensure that no individuals or groups owned more than half of the total hardware(i.e. 51%) as it would enable them in manipulating the ecosystem transactions. A key drawback of the proof of work is its inefficiency. Additionally, proof of work comes with steep hardware costs and high cost of electricity. This, in turn, increases the total transaction cost.

How did Proof of stake come into being?

In Proof of Stake, the coin itself would be used as the resource instead of the hardware, to guarantee the distribution of responsibility among the individuals. Consequently, these individual owners that use their coins to engage in transaction validation processes are rewarded for being a part of the process.

This activity is no longer referred to as mining in the algorithm of proof of work. The newly coined term for it is ‘staking’. Owing to he implementation of proof of stake, every individual is selected at random to sign blocks and are simultaneously rewarded for the same.

An off putting minus point with the proof of work is its likelihood to reward individual with higher stakes. This is so because generally nodes are selected based on the heftiness of there stake. So, the more the funds are staked, the higher the probability of a node to be picked.

This, however, stamps the chances of smaller owners for profitable staking. Hence, bigger stakes are rewarded quicker. Thus, they can grow faster by staking these rewards. This is where Delegate Proof of Work comes to aid small owners. After the addition of delegation to Proof of Stake, small owners have been enabled to delegate their staking power to other individuals who are in control of running blockchain nodes, in order to authenticate transactions.

In a lot many ways, delegation is like the proof of work for pool mining. Like while mining in the pool, it is the pool that is running a blockchain node so that individual miners don't have to. Therefore, delegated proof of work solves the issue that previous consensus algorithms have not been able to treat. This is the reason for its rising popularity and preference in the Blockchain Ecosystem.