Proof of Stake over Proof of Work
Because of legitimate energy consumption concerns, many cryptocurrencies are switching from the “proof of work” model to the “proof of stake” model to verify blocks in the blockchain. Instead of consuming large amounts of energy by performing complex, circuit board-melting cryptographic equations, the “proof of stake” model relies on a certain amount of the native cryptocurrency to be locked away for a set amount of time. It is this staked amount that verifies the blockchain. However, some platforms are taking this even further.
Smart contract cryptocurrency platform Cardano allows users to stake their ADA, the native Cardano cryptocurrency, in specialized wallets that pay them in rewards simply to hold their ADA. The added benefit is that they can remove their ADA from their stake pool at any time.
Other Practical Use Cases for Blockchain Fintech
Imagine – immutable digital identities, stored in the blockchain and only accessible to users who possess the private key to make changes and approve transactions. Blockchain tech can drastically cut down on instances of identity theft, reducing financial loss and other risks associated with the criminal enterprise. Not only can people have secure digital identities, but institutions as well, so you know for certain that you are sending your money to the correct entity.
A More Equitable Global Financial System
Entire financial applications can be built out using smart-contract blockchain platforms. Whole monetary systems can be administered in a decentralized and consensus-driven way, opening the doors to genuine democracy and financial independence. This financial independence can help developing nations who clearly have the talent pools but lack the connections and capital to enter the pre-existing financial system. DeFi truly levels the playing field on a global scale.
Special thanks to James Melton