When Ethereum switched to Proof-of-Stake with its update “The Merge”, the old disputes about mining were reborn: “Is Proof-of-Work enough for blockchains to be truly decentralized? Is PoW protected from taking over by raw computing power? Is PoW “green” enough?”, and finally: “Is Proof-of-Work reasonable?”. These questions were asked by many authorities from many different countries, and lead influencers of the blockchain industry. Alternatives of classic Proof-of-Work mining can answer these statements easily and prove that PoW-mining has too many problems.
First and the main question for all “freedom-through-blockchain” supporters - Are Proof-of-Work blockchains truly decentralized? The answer is no. PoW blockchains are intended to concentrate processing power at several most powerful nodes. And it is impossible to avoid because now devices of ordinary users cannot compete with the computing power of servers and dedicated miners.
Proof-of-Stake blockchains
Proof-of-Stake blockchains can solve this problem, changing reward focus from computing power to stored amount of coins. This allows developers to make more complex algorithms and solve 50%- and 30%-attack, flattening the influence of computing power and extracting most from it.
Another need-to-solve question is efficiency. Many government authorities do research and argue with blockchain supporters about “greeniness” of Bitcoin and other PoW blockchains. From one point of view - PoW mining farms consume too much electricity, burning it to justify the appearance of some amount of coins. And this energy can be produced in a harmful way. Now, many mining companies transfer to self-sustainable “green” energy farms, but it doesn’t solve the main problem - exponential growth of electricity consumption.
This is when alternatives of PoW and PoS can show the strong sides of their consensuses.
Future Internet
In the surge of interest to “Future Internet”, Web3 and Metaverses the problem of storage is often forgotten. But if we try to do it the same way as before, we will break the main thing that makes blockchain so powerful - decentralization. Google offers its infrastructure to keep nodes of almost all popular chains in the market - but also gains control over data flow there. Is it decentralized? No. Is it transparent? Mostly (but how long it will be, that is the question). Is it decentralized? No.
From miner’s and crypto-enthusiast’s point of view, current state of blockchain industry needs to get new principles and consensuses based on data storage and flow, to fulfill all requirements of Metaverse concept, where calculations and data processing should be done independently, free of censorship and pressure of global corporations, and, in the end, decentralized. Here comes Proof-of-Data consensus - “The truth of actions is defined by stored data”. While traditional blockchains focus their rewarding algorithms on transaction processing, PoD-chains are focused on data stored in decentralized filesystem.
ExtraChain incorporates the efficiency of Proof-of-Stake and simplicity of Proof-of-Work. But for ExtraChain, the main difference is the existence of Decentralized File System (ExDFS). Network nodes of ExtraChain store data, check data, make cross-checks and prove actions of other network actors, ensuring that data storage and processing is not influenced by anyone except owners and network algorithms. But why is Proof-of-Data efficient? The answer is simple: unlike in Chia, data stored in ExtraChain network is used by community members, the network itself and apps built with ExtraChain smart-contracts. And all these factors create a basis for coin production algorithms - so-called “data-mining”.
The choice of miner lies in simple but controversial problem: to hold to familiar but slowly outdating consensuses or try new ones in pursuit of new rising blockchain star?