- According to Zooko Wilcox, it is necessary for Zcash to go from a proof-of-work consensus mechanism to a proof-of-stake.
- Wilcox said proof-of-work has many flaws, adding that proof-of-stake is more secured.
Zcash founder and Satoshi Nakamoto collaborator Zooko Wilcox desires to use the privacy-focused digital currency to move crypto forward by recommending that it transits from the proof-of-work consensus mechanism to a proof-of-stake mechanism. If successful, the transition will significantly impact Bitcoin as well, considering the close relationship between Zcash and Bitcoin. Zcash runs on Bitcoin’s codebase. Both Zcash and BTC share similar features like the fixed total supply. Despite the relationship, the two cryptocurrencies are far apart in terms of value and adoption. Zcash’s native coin, ZEC, is currently trading at $114.85 per coin, while BTC is at $38,056. While Bitcoin processes about 250.000 transactions daily, Zcash stands at roughly 4,000.
The proof-of-stake vs. proof-of-work
Operating under Proof-of-work requires energy-consuming computing power hardware worth millions of dollars. Proof-of-work further demands enormous amounts of energy which affects miners profits. At the same time, the network has a limit to the number of transactions it can process at a time. On the other hand, the Proof-of-stake approach is faster and lighter.
The Bitcoin blockchain is the original adopter of the proof-of-work consensus mechanism. The blockchain takes about 10 minutes to confirm transactions. Additionally, the blockchain can only handle around seven transactions each second. As a result, transaction fees on the Bitcoin blockchain have surged over the past years.
The improved consensus mechanism, proof-of-stake, offers a fairer and more equal mining system. Another feature of the proof-of-stake model is scalable transactions and less reliance on electricity.
In addition, proof-of-stake is a more secure approach compared to the proof-of-work mechanism. The Zcash founder further commented on the cheap high security guaranteed on proof-of-stake. He said:
I think proof-of-work has some security flaws, as has been demonstrated by the 51% attacks that have occurred (when a miner controls a majority of computing power on the network and can steal tokens). And I think proof-of-stake can provide a much more powerful kind of security and at lower cost.
Zcash founder speaks on the transition to proof-of-stake
According to the founder of Zcash, he is clamoring for the transition to proof-of-stake because the network is ‘proven’ and no longer at the experiment stage. Wilcox referred to the successful launch of networks like Cardano, Tezos, Algorand, and Cosmos to buttress his point.
As for the Zcash founder, another reason the transition is necessary is privacy protection from the government. He added that mega-corporations and the government are seizing control over people. Wilcox continued:
…And we’re simultaneously seeing people worldwide becoming more aware and vaping their privacy more, their autonomy, their human relationships.
Furthermore, users on proof-of-work are liable to lose if the network gets attacked. The users will have no alternative in the case of an attack. Proof-of-stake networks, however, can detect bad actors ahead of an attack and tackle issues to ensure smooth operation.