What are Cryptocurrency Validators and How Do They Work?
A cryptocurrency validator is a participant in a blockchain responsible for verifying transactions. When it determines a transaction, it adds it to the distributed ledger, so the legitimacy of the blockchain and its operation remain intact.
Blockchain is a system that works on a distributed record of information. A network of nodes supports this registry by simultaneously storing and running the same version of it. A blockchain is like a book with countless authors and each of these can contribute to the book. Before doing so, they must receive validation from the other authors. The other nodes analyze the author’s data and if it is correct, validate it and add it to the record in a new block.
On most blockchains, users receive rewards for taking on the role of validator. In this way, the system encourages its participants to continue the process of expanding the ledger.
The 3 Main Types of CryptoValidators
- Validators in Proof-of-Work Blockchains
Proof-of-work (PoW) blockchains require validators to demonstrate that they have worked on verifying the data before adding it to the chain. Bitcoin is the first poW blockchain and the most popular to use this consensus mechanism. Miners use supercomputers to calculate the data that arrives. The first miner to successfully validate a new block of data receives a block reward.
- Validators in Proof-of-Stake Blockchains
In Proof-of-Stake (PoS) blockchains, users have to wager a specific amount of the native ledger token to become validators. In addition, the system can choose validators randomly and only reward those who participate correctly in the network.
Some of the most popular PoS blockchains are Ethereum, Avalanche, and Solana, among many others. These ledgers use Proof-of-Stake to incentivize users to block value within the network to ensure their rapid progress and development.
- Validators in Byzantine fault tolerance blockchains
Blockchains that do not use PoW or PoS as consensus mechanisms can employ validators. When a decentralized ledger uses this mechanism, some nodes may provide inaccurate data for validation. These nodes can be corrupted and intentionally misuse the network. However, as long as most validator nodes are honest, the validation process has a guarantee of accuracy. And as a consequence it adds more data to the chain despite the malicious actions of some of its nodes.
What is the Difference Between Validators and Miners?
Miners are participants in a PoW-based blockchain development services who don’t have to bet anything to validate data. Instead, they have to invest in high-performance computers that can solve math puzzles quickly and efficiently. These machines are usually expensive and place a heavy burden on the environment. In addition, in the long run, data mining can offer rewards less than the costs involved.
On the other hand, participants in a PoS-based blockchain have to bet crypto assets to become validators. This means that instead of investing in expensive computers, they can simply buy digital currencies.
Miners and validators have very similar functions, they make sure that the network they support expands with accurate data. However, they differ in the way they enter the validation process.
In conclusion, blockchain technology brings various forms of passive and active income. Being a validator on a decentralized ledger combines these two ways of gaining wealth. First of all, you need to have a relatively strong computer to support the security and operation of the network. As long as you meet all the requirements, your rewards can grow substantially.
Which cryptocurrency uses PoS consensus?
The PoS mechanism has turned out to be a more efficient, faster and less resource-intensive consensus mechanism. These qualities have led to a growth of proof-of-stake coins. We present some of the most popular currencies that use the PoS mechanism as a consensus mechanism.
Ethereum (ETH): Ethereum 2.0 is an upgrade to the Ethereum blockchain, with a change from PoW to PoS consensus protocol. The Ethereum Foundation launched the Beacon chain to bring the PoS mechanism to the Ethereum foundation.
Tezos (XTZ): Tezos is another leading blockchain development company that uses the PoS mechanism as a consensus mechanism. Tezos users can delegate their rights to other participants involved in the block generation and validation process.
Tron (TRX): Tron is one of the most popular blockchain platforms in the Asia-Pacific region. Tron uses the Delegated Proof of Stake (DPoS) consensus protocol, according to which a few super representatives (27) are elected for the maintenance and preservation of the blockchain network.