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The cryptocurrency era comes packed with bountiful promises of financial freedoms, transparency, and security. Bitcoin has the potential to replace traditional methods of finance especially in countries and regions where conventional banking is inaccessible or broken – what was unexpected was that it would also gave rise to another generation. Enter Ethereum and the “cryptocurrency 2.0” era.
There is a growing issue with the Bitcoin and Ethereum Proof-of-Work (PoW) algorithm and that is scalability; the mining structure is intended to incentivise miners as they race to clear the complex mathematical problems and verify transactions across the network, the miners that complete the work receive their reward which is a fraction of the total transaction value.
However, the mining process and PoW has caused a high concentration of influence in mining pools that can run the energy-consuming miners with relatively cheap electrical power. The influence of these mining groups has the power to conduct changes to the network with events such as hard forks. Bitcoin creator Satoshi Nakamoto aptly noted that mining control is the biggest non-cryptographic threat to the Bitcoin network, this is down to the possibility of a ‘51% attack’ which is when more than half of the hashing power is restricted to one entity. According to Energy Researcher Sebastiaan Deetman:
“If the bitcoin network keeps expanding…it could lead to a continuous electricity consumption…[equivalent to] the total consumption of…Denmark by 2020. The continuous consumption of electricity through the processing power required by mining incurs monthly costs in the tens of millions. There is little sustainability in this over the long-term.”
The Obelisk Protocol
In this new era of cryptocurrencies and blockchain technologies, innovators are taking it upon themselves to correct the issue. More specifically, Obelisk is making gigantic strides toward that goal; Obelisk distributes influence across the network in accordance with a web-of-trust architecture. Instead of miners, the network consists of nodes, which are far less expensive to acquire and operate than traditional mining hardware that is used to mine Bitcoin or Ethereum.
The web-of-trust architecture prevents the chance of their being a centralized power in cryptocurrency mining and Skycoin is a part of this new ecosystem designed to eliminate mining rewards, create energy efficient custom hardware and create a more secure and private alternative to the internet.
Skycoin doesn’t rely on mining incentives, making is impervious to a ‘51% attack’, additionally mining farms will no longer need to buy computers by the thousands to run Obelisk due to there being no chance that the network will be taken over, and even in the event of a large pool of resources being utilized to disrupt the network, it would be detected and shut down immediately.
Presently, the easiest way to run an Obelisk node is to buy a Skywire Miner or build your own DIY setup. Obelisk nodes themselves do not produce any monetary value, however it does keep the Skycoin blockchain secure. Should an individual chose to build or buy a Skywire Miner and operate nodes on the Skywire network, they can earn Skycoin (SKY) for contributing those resources and bandwidth. Whereas Bitcoin’s value is derived from speculation of the future value of the network, the value of Skycoin is immediately there as soon as the Skywire testnet launches.
As the technology and industry evolve at a dizzying pace, there are blockchain solutions out there like Obelisk and Skycoin that are looking to right potential wrongs, and in fact, make blockchain and cryptocurrency technology overall, functioning, scalable and secure.
To find out more, visit the Skycoin website: https://www.skycoin.net/