People interested in Bitcoin and other cryptocurrencies will find this interview with Denis Gvozd, co-founder of Dev Team Inc., very informative. Denis shares his professional experience and offers advice that can help readers make a profit from cryptocurrencies and cryptocurrency mining.
Denis, will you tell us what POS is? Is there any difference between POS and POW?
At the moment, I am very interested in working with Bitcoin and mining, as are many people all around the world. You can find a lot of articles, books, and video tutorials devoted to this subject. I would like to share my point of view with the readers.
It is worth mentioning that Bitcoin works on the algorithm known as the "Proof of Work." I will try to explain the basics of the algorithm so readers can easily understand the main principle.
Your PC is able to solve a complicated issue by selection. You are a miner and get granted a cryptocurrency reward. The final result will depend on the task's complexity. Make sure your PC power is high enough.
Working with cryptocurrencies requires top-end computer equipment, but the investment is worth it.
I would like to point out that the Proof of Work, or PoW, is a complex mining process requiring a large number of resources. If you want to achieve success in mining, you have to be ready to buy powerful equipment and invest in a sufficient amount of electricity.
Mining can be a concern for eco-friendly individuals concerned about the environment. Let's hope that in the future we will develop equipment which consumes less electricity.
You can also use another algorithm called "Proof of Stake," or PoS. It is widely used in altcoins like Cardano or Ethereum. Following this protocol allows you to add new blocks and confirm many transactions.
The only difference from PoW is the PoS has a high transaction speed and is a more eco-friendly approach.
Denis, the readers want to know your opinion about a stake pool. What is it? Who is the chief stake pool operator? What benefits can people expect to get when they start delegating coins to some stake pools? Is it safe enough for people to use them? How to select the right one?
It is important to see how the PoS algorithm functions in action. We are going to use Cardano as an example.
Let's say you bought 1000 ADA, which is the name of a coin on the "Cardano" platform on a crypto exchange. You have two options on how to make more money using this cryptocurrency. You can:
1. Create a "Stake Pool" and get money when other users start delegating their own coins to your Stake Pool. You have just become the SPO (Stake Pool Operator). Anyone can create a new stake pool. It is not difficult and does not require too many resources or advanced PC equipment.
You will need two PCs and some specific software programs. Make sure your computers can work 24/7 without being interrupted. The operation generates income by attracting as many people as possible to delegate their coins to your stake pool.
If you want the Stake Pool to get rewarded, you must make a block on the blockchain. That will depend on the amount of ADA the pool participants delegate to the Stake Pool. As a rule, the reward gets divided into two parts: the owner gets the first part, a minimum of 340 ADA, plus a percentage. Usually, new stake pools set this percentage as 0 to attract people to delegate coins to the stake pool.
The second part gets distributed proportionally to other participants based on how much they have delegated to the stake. The more a person has put into the stake, the greater their reward.
A stake pool functions like a bank. Make sure you can make a deposit, called a "pledge" in the cryptocurrency circle. When a new stake pool is created, the creator must delegate some ADA to "pledge." It is not an obligation, but all experts recommend doing it.
If something bad happens with the stake pool, the pledge is not returned to the pool's creator. On the other hand, all people who delegate their coins to a stake pool will not lose their coins.
Delegating the money to a stake pool does not give away the stake pool member's right to own the coins. It only gives the stake pool the right to use those coins. Delegating coins to a stake pool is always safe for the owners of these coins.
2. Delegate your cryptocurrency to a specific Stake Pool. You can choose from over 3,000 stake pools. The process is similar to making a deposit in a bank. You delegate your cryptocurrency and wait to receive the desired percentage. If something bad happens with the stake pool, the individual will not lose the coins they delegated to the pool. If you compare this system with traditional banks, it is safer. If the bank fails, depositors are likely to lose their money. Stake pool is always safe for the owners of these coins, unlike banks.
Are you ready to speak about the essential features of Cardano stake pools? What ideas does your stake pool carry?
To make a new stake pool to produce the maximum blocks in the blockchain, it is necessary to delegate coins to it. The biggest challenge is to attract as many coin holders as possible. You will need to make a professional marketing program that explains why others should select your stake pool.
Be sure your stake pool has a unique idea and the principal value for the Cardano platform. This part of the money will be provided from the stake pool's reward. That means that when the SPO receives a reward, it can be spent on some charity so people will encourage your goodwill.
My company, "Dev Team Inc." is proud to claim that we have launched our own Cardano stake pool: "Dev Team Pool." All the money we earn from the stake pool goes to sponsor our school, where we teach the Haskell programming language and how to develop programs for web 3.0. Haskell is a unique language used in Cardano.
Denis, please tell your readers about the currency exchanges. What are the main advantages/disadvantages? How can a user boost the level of overall security?
One of the simplest ways to purchase cryptocurrency is to register on a trusted exchange, such as Binance, select a coin, and purchase it for dollars or another fiat money. As soon as you have purchased the coin and located it on the exchange, you wonder whether you own it. Most exchanges never tell you all the details because it may not be profitable for them.
When you keep coins on any exchange, you no longer owns that coin. If a hacker attacks the exchange, you risk losing everything. Making a claim against the cryptocurrency exchange will not change anything. You simply don't own cryptocurrency on the exchange.
How can you own a cryptocurrency? When a user buys some crypto on crypto exchanges, the "private keys" belong to this crypto exchange. The owner of these "private keys" can do whatever they want to do.
If the cryptocurrency exchange decides for some reason it will not return the user's money, the user is unable to do anything. The most important fact about placing crypto coins on an exchange is that the money can be spent or sent to another wallet only by the person or company owning the "private keys."
There are many different solutions available, such as hardware wallets or non-custodial wallets, that provide the possibility to control and own "private keys." As soon as the user decides to move their crypto from the exchange and start delegating this crypto to some stake pool, the user will be able to make more money, and the user will control their coins. It is worth noting that this is not true for all types of cryptocurrencies. For example, bitcoin cannot be delegated to a stake pool.
Finally, let's talk about decentralization and the role of the Cardano platform in it. What are your thoughts regarding this issue?
When an individual stores a cryptocurrency on an exchange, there is another disadvantage that is worth mentioning. The term "decentralization" is widely used in many fields. For cryptocurrency, the issue of decentralization arises when crypto exchanges start owning the majority of currencies.
We should refer once again to the Cardano platform. Here are Cardano's major advantages:
1. Storing cryptocurrencies on a crypto exchange creates another hidden disadvantage. Everywhere on the internet, you hear the beautiful word "decentralization." Will decentralization be real if crypto exchanges own the majority of cryptocurrencies? The answer is more "No" than "Yes."
2. The Cardano platform is an excellent example of decentralization simply because many people are involved in the project, which functions as a worldwide community. The number of coins gets distributed to a large number of people, which is the essential condition for decentralization. When a limited number of people, or an exchange, owns most of the coins, it can be dangerous for the platform. As soon as those majority owners decide to sell their coins, the whole platform can be broken.
3. Cardano is a perfect platform that began development in 2014 and launched in 2017 after three years of research. While many projects decided to launch and fix any bugs and issues to correct errors, Cardano didn't. Cardano started with a lot of research and then launched the project. Cardano started very slowly and is still relatively slow, but they have avoided making big mistakes.
4. Voting on the Cardano platform is specific and safe. In the Cardano ecosystem, the user has a chance to cast a vote and actively influence the future of the project. Everybody with enough count of cryptocurrency can vote for the most interesting projects. In contrast, crypto exchanges that own a lot of ADA (cryptocurrency) have significant sway in any votes. In fact, the exchange may be the only entity able to vote if they own "private keys" and the crypto. This means the exchange can vote for projects that benefit the exchange but could be dangerous for the platform itself and most of the people participating in it.
It is proof of the importance of having a clear understanding of who is the real owner of your cryptocurrency.
