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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.

Proof of Work: The original but still the best?

A look at the first blockchain consensus mechanism

The first cryptocurrency, Bitcoin, uses a Proof of Work consensus mechanism.

At our core, humans are a contradictory bunch. We seek freedom yet crave security. Celebrate chaos but applaud conformity. The same person who wants an all-night party also wants a funeral-quiet morning.

Maybe it’s not a case of contradiction at all; maybe we just need balance. However you want to frame it, the tides of decision that rise and fall in our minds have a way of undermining each other, for better or worse.

Take decentralised finance. Rising from the ashes of the global financial crisis of 2008, the concept struck a chord with a community who’d grown tired of financial wealth and power being controlled by a small group of central entities. And so blockchain technology was developed.

From an ideological standpoint the appeal of blockchain technology is easy to see; who hasn’t wondered, whether aloud or to themselves, what life would be like without banks? But, for a system like this to work it must be functional, otherwise the whole thing remains a utopian dream. Enter Proof of Work.

What is Proof of Work?

Put simply, Proof of Work (PoW) is a decentralised consensus mechanism. In other words, it is a system that requires the members of its blockchain network to expend computer power to solve mathematical puzzles in order to verify network transactions and build blocks. To qualify as ‘decentralised’ it must be quickly and easily verified by everyone participating on the network.

But why do we need it?

As mentioned above, PoW makes the blockchain network functional and safe by demanding that all members of the network verify transactions and build blocks the same way. Without this requirement a member could ‘double-spend’ (in essence, spending more than they have) which would derail both the functionality of the blockchain and the value of the coin attached to it.

A consensus mechanism keeps a network both safe and functional.

So, how does PoW work?

Okay, imagine that each miner (the name given to someone trying to verify transactions and build blocks) is given a pair of scales, and in order to verify transactions and add blocks they must balance these scales. With a normal pair of scales this task is easy as the miner can see the weight they must offset. But what if one side of the scales is hidden? The task now becomes much more difficult as the miner cannot rely on visual cues to balance the scales; rather, they must guess at random until balance is found. When balance is found the whole scale is revealed. This is vital to the mechanism as the solution must be verified quickly and easily. Once the work is verified the block is built.

While the process for verifying and adding blocks remains the same, the difficulty of the scales changes, depending on how quickly miners are finding balance. If miners are finding balance and adding blocks too quickly the scales become more difficult, and vice versa. In this example, the difficulty is defined by the accuracy of the scales; a difficult pair might require a balance down to the milligram, whereas a less-difficult pair might require a balance closer to the kilogram.

What are the advantages of PoW?

The first and foremost benefit of PoW is that it’s safe. Given the amount of computer energy that you need to verify transactions and build blocks, the possibility of an attack on the system is unlikely as it is expensive and impractical for the attacker. Granted, this can still occur if miners band together to gain 51% of the mining power, but even then it is rare as there would be little to gain.

Because PoW is safe it has the added benefit of being trusted as a consensus mechanism. This is evident in the fact that the two largest cryptocurrencies in the world, Bitcoin and Ethereum, have relied on PoW since their inception (though Ethereum has switched to a Proof of Stake mechanism, which we will discuss in our next lesson).

Are there disadvantages?

What PoW gains in safety and trustworthiness, it lacks in transaction speed and energy efficiency. It takes about ten minutes to verify and build a block on the Bitcoin network, which at first glance doesn’t seem much, until you consider that most other cryptocurrency networks conduct their transactions in a fraction of this time (when Ethereum used PoW its transactions speeds were about 13 seconds). For Bitcoin, this lack of speed also points toward its scalability issues, meaning that it will struggle to evolve over time.

The flipside to the security that PoW provides is the huge amount of computer power it needs to verify transactions and build blocks. From both a financial and an environmental standpoint, this is a significant strike against Proof of Work, especially as investors and developers look more toward ‘greener’ business options. Another downside to this inefficiency is that the power used and the calculations made are not applicable anywhere else; if there were secondary uses for these it would reflect much better on the mechanism.

What PoW gains in security it lacks in efficiency.

Despite the brevity and simplicity of this article, it’s clear that Proof of Work, like most systems, is not perfect. What’s perhaps less clear is knowing which attributes the public consider more important. On the one hand, most will scorn a system that leaves such a large carbon footprint. On the other hand, most will name security as an essential part of any system. What’s safe for the environment is not safe for your investment, and vice versa. And it’s this debate that once again calls our contradictory nature to the surface.

The most popular and dare say, most important cryptocurrency Bitcoin is still reliant on PoW. In order to understand the mechanism and Bitcoin better, one needs to get some skin in the game. CobWeb Pay, available on both iOS and Android allows users the ability to purchase Bitcoin at some of the industries lowest rates and most secure options for storage. Download CobWeb Pay, register, verify and see your Bitcoin holdings grow with an imminent bull-run on the horizon.

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.