PURA 101 – Cryptocurrency Basics Part 7

PURA terms from Node to Proof of Work…

…ABCs of cryptocurrencies

And on we go with PURA keeping you in the know with your cryptocurrency terminology, where we last left off with sending PURA “to the moon”! Don’t forget sharing is caring. We want PURA to grow as we are in the beta testing phase ofAurora. So spread the word by sharing our posts and articles in all your social media channels!

Today we continue with the letters N, as in node to P, as in Proof of Work. For those of you just tuning in now, PURA 101 is a series on terminology of cryptocurrencies and blockchain technology. Visit our blog, the BlogChain, in case you have missed the previous parts of our series. The PURA team wants to ensure that find as much information as possible here in our PURA blog. Feel free to contact us if you want to find out more on a certain term. We will try to include your questions in an upcoming article.

We are receiving many questions on basic cryptocurrency terms from new users, so today let us start with the term

Node

Cryptocurrencies run on decentralized networks. This means that there is no central server involved in transactions. A node in a network is a connection point for data transmissions. It serves an intersection on a communications network that can function as a redistribution point or an endpoint. Any computer connected to the network is called a node. Full nodes are nodes that fully verify all of the rules of a network, such as transactions. Miners are nodes that assemble the blocks and add them to the blockchain. It is through the miners that the consensus in a blockchain is enacted. Miners collect transaction fees and rewards for adding the block to the blockchain.

Paper Wallet

Please note once again that we want to discourage you from using paper wallets exclusively. If you have been following our PURA 101 series you know that we cannot remind you enough: Please use Cold Storage! However, just to elaborate on the terminology we have included this term. Therefore, a paper wallet is a document containing the printed-out information on a public key and a private key, often in the shape of QR codes. It does not have to be paper, it can also be on a plastic card. However, it is not a safe way of storing information.

Proof of Stake

Proof of stake is a type of consensus system in blockchain technology. In this type of system, is not the power of the computer that makes the difference but the wealth of the miner or other indicators such as wealth, coin age or randomized block selection (the “stake”). Mere selection by assets would put the wealthiest member at permanent advantage. The creator of the new block is chosen depending on the user’s fulfillment of the criteria of the stake.

Proof of Work

The more common consensus system is still “Proof of Work”. In this system, miners compete with each other to be the first to “mine” a block in order to complete a transaction. The winner receives a reward. As more computing power is added to the network and more coins are mined, the average number of calculations required to create a new block increases. Thus the level of “difficulty” miners to win a reward keeps getting higher. The generation of currencies based on Proof of Work results in very high energy costs. This creates downward pressure on the price of the cryptocurrency from newly generated coins. Consequently, miners have keep improving the efficiency of their mining rigs. Energy consumption and its drawbacks are among the largest challenges in the cryptocurrency industry. As a conscious cash movement for the common good, ten percent of all PURA created goes to PURAPlanet, a treasury trust dedicated to fund and track sustainable, environmental, and social projects around the globe.

This is our terminology for today! We hope you were able to gain new insights in the world of cryptocurrencies and blockchain – have a great day!

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