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Amid much fanfare and anticipation CloudTech Group has finally come out with a release date for their highly touted CloudTechX Wallet.It is set to officially launch sometime in mid-September; the date will be confirmed as soon as all final tests are successfully run.

This entity was brought to life due to a lack of a real solution in the present Australian market for a secure storage of cryptocurrency funds which also enables swift withdrawals of holdings into AUD. At launch, CloudTechX wallet will offer multi-asset support for funds in the form of Bitcoin, Ethereum, Tether and Australian dollars- with more crypto currencies being onboarded later on.

Setting up a wallet is as streamlined as its user interface; download the app from the operating system of choice; available on both theApple App store and Google play store, create an account on it and add a government issued ID for KYC (know your customer) verification. Once verified, transfer over any crypto holdings, link a bank account and withdraw any of the holdings into AUD. Users engaging in the withdrawal service will receive realtime exchange rates of the specific crypto along with a flat 0.1% transaction fee. Another security feature is the enabling of a third-party coin tracking service which traces the transfer of funds from one account to the other and helps reduce the prevalence of illicit sources of funds.

CloudTechX wallet are officially licensed custodians of funds and the fact that the wallet exists off-chain ensures complete security for user data and especially user funds. Additionally,CloudTechX is a registered Digital Currency Exchange (DCE) with AUSTRAC which allows for the primary function of exchanging crypto to fiat and fiat to crypto.

A preview of the interface and supported cryptocurrencies.

In The Other Corner…Proof of Stake

A Worthy Adversary To Proof of Work?

I was eight, or nine, and our family had a ritual. Every Saturday afternoon, my father and mother would take my little sister and I to the movies. It was my favourite time of the week. And not just for the film. Afterwards, before driving home, we’d have a late lunch at one of the three fast food restaurants that stood in a neat row next to the cinema.

It never bothered me which restaurant we ate at; I loved them all equally. I was, however, a curious kid, and often wondered why they chose to live next door to each other. Would it not hurt the business of each restaurant to have competitors as neighbours? One day, I asked my father. He stopped walking and thought for a moment, perhaps a little surprised at my query, before turning to me.

‘A little competition is healthy for everyone.’

He said nothing more, and I was left to ponder his words on the ride home. I’ve since come to understand the importance of competition. In the world of restaurants and food it keeps everyone on their toes. A new flavour here, a better menu there. Two-for-one this. Free-with-that.

The world of technology is no different. Though the benefit to the public might not be as instantly gratifying, the innovation that comes from trying to best everyone else in your field tends to help the rest of us in the long run.

Blockchain technology is a good example of this. With the inception of Bitcoin came Proof of Work (PoW), a consensus mechanism that proved safe but slow. Proof of Stake (PoS) was the first alternative to this, promising improvement across all aspects. Here we will discuss what PoS is, how it works, and what if offers in terms of competition to PoW.

So, what is Proof of Stake?

Again, like Proof of Work, Proof of Stake is a consensus mechanism. However, while the intended outcome is the same, the way PoS achieves this is much different to PoW. The two main differences are:

  1. The users involved in verifying and building the blocks are called Validators, instead of Miners.
  2. Instead of competing with each other to solve cryptographic puzzles, validators must ‘stake’ a certain amount of the coin native to the blockchain they are operating on in order to be selected.

The way PoS chooses validators is like a lottery.

But, how does PoS work?

As mentioned above, the first thing you must do as a validator is stake a certain amount of the blockchain’s native coin (for example, if you are operating on the Ethereum blockchain then you must stake ETH to validate blocks). To stake simply means to pledge an agreed amount as collateral. The reason for this step is that it keeps you honest in your operations; any attempt to make a fraudulent transaction will result in you losing your stake.

Once all the validators have staked one is chosen at random to validate the transaction and build a block. While the selection is random, you can improve your chance of being selected by staking more coins. Think of it like a lottery; the more lottery tickets you buy the more chances you have of winning.

If you are selected, you simply validate the transaction. However, unlike PoW, for the transaction to be verified the majority of validators must agree that the transaction is accurate. Once this is agreed upon the transaction goes through and the validator is rewarded.

And how does it compare to PoW?

Compared to PoW, PoS has both advantages and disadvantages.

The major advantages that PoS has over PoW are:

  1. PoS uses less energy. Like, much much less energy. For example, when Ethereum switched from PoW to PoS it was reported that the network’s total energy consumption would decrease by 95%. Given blockchain’s much-reported effect on the environment, this can only be seen as a win for PoS.
  2. PoS is faster. Again, much much faster. For example, while it takes on average ten minutes to verify and build a block on the Bitcoin network, it takes about 12 seconds on the Ethereum network.
  3. Scalability. A combination of the two previous points makes PoS more scalable, which is a key goal for any blockchain network, especially if the network wants to one day achieve mass adoption.

Meanwhile, the major disadvantages are:

  1. PoS is less secure. Because you only need the minimum amount of native currency to become a validator, there is more chance for bad actors to join the network and attempt fraudulent transactions.
  2. PoS favours the rich. Because you need to stake to become a validator, the more coins you own the better as the mechanism’s algorithm will favour validators with more to stake. This gives rise to wealthier validators having more influence on the network, which runs against the ethos of decentralisation.

While it’s clear that PoS has significant pros and cons when compared to PoW, the more important issue, possibly, is that it exists as an alternative mechanism. On the one hand, this is great because it gives developers another option to consider when building a network. On the other hand, with more than one mechanism available, both developers and users have more to analyse to see what can be improved. Given that blockchain technology is still relatively new, this can only be seen as a positive thing. And, in the end, it proves that a little competition really is healthy.

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Disclaimer: Approach cryptocurrency investments with prudence, recognising their speculative nature and inherent risks. Exercise caution during the initial stages of investment and take time to familiarise yourself with the market dynamics. Seek guidance from financial experts and employ a diversified investment strategy to mitigate potential losses.