LogoLogo
Open a Support Ticket!GridPlus.ioDiscordLattice Manager
  • Welcome!
  • Setup
    • Lattice1 Device Setup
  • Lattice1
    • Lattice1 Introduction
    • Lattice1 Security Features
      • Lattice1 Random Number Generation
    • How the Lattice1 Makes Transactions Readable with ABI Decoding
      • Advanced ABI Decoding
    • How to Manage Your Seed Phrase
    • Lattice1 Power Supply
    • Supported Digital Assets
    • Lattice1 WiFi Troubleshooting
    • Lattice1 Firmware Reference
    • Lattice1 Guides 🛠️
      • Update the Firmware
      • Verify That Your Lattice1 Is Authentic
      • View the Seed Phrase on Your Lattice and SafeCard
      • Claim Your "Verified Lattice1 Owner" POAP and Discord Role
      • Establish a Connection With Your Lattice1 via SSH
      • Connect to WiFi Using SSH
      • Disable Wifi When Connected via Ethernet Using SSH
      • Managing ETH Validator Keys
  • SafeCards
    • Introduction to SafeCards
    • Setting up a New SafeCard
    • SafeCard Operations
    • Lattice1 Doesn't Recognize the Inserted SafeCard
    • SafeCard CLI
  • Apps & Integrations
    • Lattice Manager
      • Managing Your Bitcoin Wallet
      • Creating Custom Address Tags
      • Using the Wallet Explorer
      • Connecting Your Lattice to Your Own Private Endpoint
      • Lattice Manager Troubleshooting
      • How to View the XPUB of Your Bitcoin Wallet
    • MetaMask
      • Installing MetaMask
      • Connecting to MetaMask
      • Advanced MetaMask Setup
      • MetaMask Troubleshooting
    • NuFi
      • Connecting to NuFi
    • Frame
      • Installing Frame
      • Connecting to Frame
      • Advanced Frame Setup
    • Rabby
      • Connecting to Rabby
      • Rabby Troubleshooting
    • MyCrypto
      • Connecting to MyCrypto
      • MyCrypto Troubleshooting
    • Ambire Wallet
      • Connecting to Ambire
    • Eidoo App (Mobile)
  • Additional Resources
    • Payment, Shipping, Delivery
    • GridPlus Affiliate Program
    • Developer Resources
    • GridPlus Brand Assets
    • Bug Bounty & Responsible Disclosure Policy
  • Blockchain Basics
    • Introduction
    • Wallets
    • A Brief Introduction to Private Keys
    • Blocks & Consensus Mechanism
    • UTXO vs. Account Model
    • Bitcoin
    • Ethereum
      • Smart Contracts
      • ERC-20 tokens
      • NFTs
      • Layer 2s
Powered by GitBook
On this page
  1. Blockchain Basics

Blocks & Consensus Mechanism

PreviousA Brief Introduction to Private KeysNextUTXO vs. Account Model

Last updated 2 years ago

As the list of transactions grows, they are packaged into discreet so-called blocks of transactions, which are then confirmed to be legitimate by special network participants called "validators" or "miners". After being validated, these transactions are added to the tx list on public ledger and this is how you can see balance changes within the network. Most blockchain systems employ methods of transaction validation called either proof of work (PoW) or proof of stake (PoS). Different methods of validation exist (such as proof of authority), but you will see PoW and PoS most commonly.

Proof of Work

In proof of work, special participants in the network called miners use computing power to solve a cryptographic puzzle which, if done before any other miner, gives them the right to produce the next block which will include all current pending transactions. Miners are rewarded for this work in the blockchain's native currency. So each time a miner produces a block they get some crypto as payment.

Proof of Stake

In proof of stake, instead of employing expensive, power-hungry, and dedicated computing machines to secure the network, validators secure the network using typical computers that meet minimum hardware requirements for running the validation software and by staking some amount of the native cryptocurrency.The key element to proof of stake is the validator's stake: 32 ETH in the case of Ethereum. We refer to PoS 'miners' as validators. These validators are staking their coins on their promise that they will uphold the network and not behave maliciously, lest they have they stake burned. A user who wishes to validate the network and receive rewards for doing so will have to deposit their stake into a staking contract, which will either accrue rewards when they accurately and honestly secure the network, or be burned if they act dishonestly.Proof of stake has many benefits over proof of work such as:

  • Much less energy usage (the Ethereum network dropped its energy usage by 99.95% when it switched from PoW to PoS).

  • Reduced hardware requirements (some user's run full nodes on Raspberry pi 4 computers).

  • Reduced risk of centralization.

  • Lower token inflation due to less tokens being created to reward validators.

  • Network attacks become much more expensive to enact.

But what is a miner's computer doing? The miner's computers are looking for a special number, that when added to the next proposed block's list of transactions, will cause a hash of the block to have a certain number of leading zeroes (0x003e5...) which satisfies the network's current mining difficulty condition to keep the block time consistent. While it may be trivial for a computer to guess which number added to a potential block will lead to a single leading zero (0x0e55...), finding a number which leads to a hash with many leading zeroes is exponentially more difficult and it takes tons of computing power all over the world to solve these cryptographic puzzles. While this is important work that keeps a blockchain secure it is inherently wasteful since the product of the labor is only proof that a someone has done the work to solve the puzzle and nothing else, and it takes an enormous amount of electricity for all PoW miners to validate blocks of transactions in this way.

We highly recommend watching for more information regarding basic blockchain technology and proof of work mining!

SHA256
this video
Tons of expensive hardware works constantly to secure the blockchain in PoW mining.
Proof of stake mining is done with much less power and hardware requirements and is more sustainable overall.
Miners/validators compile all pending transactions, validate them and add them to the blockchain. They get to add a special transaction to the end of each block that creates a rewards for their work.