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What is DPoS - Delegated Proof of Stake?

What is DPoS - Delegated Proof of Stake?

All crypto currencies have a blockchain and a rewards system for people working and keeping the blockchain safe. There are several possible mechanisms to achieve a high level of security and stability, but all have an energetic cost that is paid by the person making this work.

To encourage people to maintain a secure network, there is a rewards system based on the work done. One of these methods is the DPOS (Delegated Proof of Stake). It is defined as one of the most efficient, fast and decentralized consensus patterns. The customizable parameters of the network, such as the fee, the block time, the block size, can be edited with the voting system of the delegates. Obviously, it is not necessary to have an entity or a central authority. It's all decentralized!

The first crypto currencies that implemented the DPOS model was Bitshares.

The DPOS is a POS (proof of stake) variant developed to reduce the energy used to keep the network secure. In the POS model, every wallet containing coins can participate in the phase of POS and by validating block and transactions, and earn coins in return. In the DPOS model, every wallet containing coins can vote for a delegate who participate in the validation phase, maintaining the blockchain safe and earning coins in exchange.

The fact that only a few chosen "Delegates" can participate in the network security, would seem to go against the decentralization paradigm. However, considering the Bitcoin world where the mining pools took control of the network, having a fixed number of delegates keeps decentralization at an even lower cost than other mechanisms.

What is DPoS - Delegated Proof of Stake?

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Smart Blockchain Insurance Gambling - Smart contract is the way

Smart Blockchain Insurance Gambling - Smart contract is the way

The blockchain, Bitcoin's underlying technology, is going to change the insurance world. By combining the blockchain and Ethereum, a decentralized platform that runs smart contracts on VM, it is possible to sign a digital and smart contract without the need of a third party and without the need to waste a lot of money. Transparency and decentralization are the key factor for the years 2016 and 2017 about insurances. 

Blockchain is a distributed ledger with enormous innovation potential in all areas of financial services. Bank and financial institutions are investing in studying and developing blockchain use cases, they are brainstorming on how to use blockchain technology to take advantages of revenues and costs. The blockchain technology offers potential use cases for insurers by reducing costs and preventing frauds.

By combining the blockchain with Ethereum, we can develop a smart contract, store it forever inside the blockchain and let the nodes evaluate the contract. It is possible to reduce drastically the maintenance costs, the storage costs and the verification costs as all is done by the blockchain technology and Ethereum platform.

The real 2017 challenge is figuring out how the smart contract can automate the subscribing of policies, the validation of claims, and the verification of the contract. A big help is provided by the so-called Oracle, for example by Oraclize, one of the automated tool for oracles.

A simple use case for travel insurances concerns the holidays and weather conditions. The consumer purchase an all-inclusive 7-days holiday's to the moon with the following condition:

  • If it rains for 3 or more days, the insurance will pay back half of the holiday's price
  • If it rains for the whole holyday's, the insurance will pay back the full price
  • If it does not rain, nothing happen

The smart contract includes all the above conditions and inside the "software code" there'are different API calls to free weather services or to Oracles. The smart contract is propagated in the Ethereum network and inside the blockchain. The day after the end of the holidays, the nodes will process the smart contract and refund totally or partially the consumer if it has rained some days.

Another use case is about gambling or betting. I can sign a smart contract that my train will be in late about 10 minutes. The smart contract (through Oracle) will call some free API to check the train delay and eventually unlock the refund.

With blockchain technology, we have a public ledger where we can track everything! For example, we can keep track of: 

  1. Ownership of Paintings
  2. Ownership of artwork
  3. Car production line
  4. Music copyright
  5. Patents

The blockchain will change the world!

Smart Blockchain Insurance Gambling - Smart contract is the way

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