Tuition Coins are native assets on the Cardano blockchain and exist in a preminted state. Why we selected Cardano as our preferred blockchain for creating Tuition Coins needs to be understood but before we do that it’s important to understand the concept of Proof of Stake.
Both Proof of Work and Proof of Stake are algorithms that secure the blockchain for users to add new cryptocurrency transactions. But there are some differences between the two. Cryptocurrencies are decentralized and require computer verification to make transactions visible.
Both proof-of-work and proof-of-stake can help users conduct secure transactions, making fraud difficult and costly for bad actors. They have participants prove that they have contributed resources such as energy, computing power or money to the blockchain. The main difference between Proof of Work and Proof of Stake is how the blockchain algorithm defines and selects users to add transactions to the blockchain.
Proof-of-work consensus algorithms use complex problems that miners can solve using high-performance computers. Problems are solved by trial and error. The first miner to complete a puzzle or cryptographic equation is authorized to add new blocks to the blockchain for transactions. When blocks are verified by miners, digital currency is added to the blockchain. Miners also receive payment in coins.
Proof-of-work systems require fast computers that consume a lot of power resources. As the cryptocurrency network grows, transaction times may slow down because it requires a lot of energy and electricity.
Miners commit to investing in digital currency before validating transactions using proof-of-stake. In order to validate blocks, miners must use their own coins. Miners also show when they verified the transaction. Who validates each transaction is randomly selected using a weighted algorithm based on stake size and validation experience.
After miners validate a block, it is added to the chain, and miners receive cryptocurrency as their fee as well as their initial stake. If miners do not validate blocks correctly, miners’ stakes or coins may be lost. By tricking miners into betting, they are less likely to steal coins or engage in other scams – adding another layer of security.
The proof-of-stake system was developed as an alternative to proof-of-work considering energy consumption, environmental impact, and scalability.
Cardano is an open-source proof of stake blockchain that provides smart contract functionalities. As such, developers can use it to launch decentralized applications, making them globally available.
Created in 2017 by Charles Hoskinson, one of the co-founders of Ethereum, the Cardano blockchain tries to solve some of the issues of other projects. Namely, it aims to be faster than Bitcoin, more decentralized, and provide cheaper transactions and gas fees than Ethereum.
The Cardano blockchain is composed of two main elements:
A second unique aspect of Cardano is its proprietary consensus mechanism called Ouroboros Proof of Stake. In this validation mechanism, users can become full node validators or delegate their stake to other superusers to validate transactions on the network.
In Ouroboros, time is divided into epochs, and for each epoch, a new set of validators is voted in by the system. This allows for better diversity and decentralization of the pool of validators.
Validators are rewarded with new ADA tokens to distribute to everyone who delegated their stake, effectively creating an opportunity for passive income.
Cardano has a wide array of advantages. Below are 5 of the most important ones compared to competitors in the crypto sphere.