Industry experts have been debating the claims of Cardano’s Charles Hoskinson for some days now. The Ouroboros allegedly addresses the true role of proof-of-stake systems. Over the years, experts have debated on the effectiveness of proof-of-stake systems and IOHK claims that Ouroboros is going to provide an answer. Very soon, Ouroboros will power Cardano which currently has a market capitalization of $3.3 billion.
An Effective Proof of Stake System: is it Possible?
The proof-of-stake systems were first introduced by Sunny King and Scott Nadal in 2012 to be more sustainable alternatives to proof-of-work systems used by Bitcoin. It allows users to stake their coins on specific transaction histories for rewards rather than wasting computational energy as with the proof-of-work system.
Some in the industry feel the proof-of-stake system should completely take over the proof-of-work for the industry to move into a new era. In this case, users will not need to have access to a hardware to claim blockchain rewards. The only challenge is that there is no consensus on how it should be done.
A proof-of-stake researcher, Nate Rush said:
“Different consensus algorithms thrive in different environments. If there is an assumption that the protocol is solved that turns out to be unrealistic, the protocol may fail.”
The bottom line is that a lot is at stake but the Cardano team claims that they have developed relationships with different researchers in the distributed computation field to show that the proof-of-stake system can be achieved without any security risks or risks of failure.
The company claims to have developed formal proofs for each design step to dispel doubts in the algorithm’s ability to keep assets secure. On like other proof-of-stake systems, Ouroboros was developed with a formal proof of security. The system will capture security properties of large transaction ledgers. The goal is to replicate the functional and security capabilities of the proof-of-work system without using electricity.
The ultimate question is whether the theory is applicable in reality. There are a lot of researchers who believe that the proof-of-stake is doomed. The next few months will determine if Cardano USD solved the proof-of-stake problem.