In-depth Analysis of POW Tokens Computing Power and Value in the Cryptocurrency World
Analysis of POW Tokens Computing Power and Value in Cryptocurrency World
Author: WJB
Regarding POW, there has always been a consensus in the industry that “POW is for bear markets”. This means that in bear market conditions, when various problems arise in the industry and various methods fail, POW will once again enter the mainstream and become the focus of attention.
Many friends who are not familiar with blockchain often equate blockchain with Bitcoin, believing that the two are essentially the same. This view is obviously biased. The role and significance of blockchain are more like the internet, a general term, while Bitcoin is the most successful and important application among them.
However, one thing we cannot deny is that Bitcoin is where blockchain began. And the consensus mechanism of Bitcoin, POW (Proof of Work), has also created a new model, with countless POW tokens achieving computational power and value in the crypto world. So today, let’s talk about POW tokens.
What is the POW consensus mechanism? What are its core advantages?
The POW consensus mechanism, short for Proof of Work, was established along with Bitcoin by Satoshi Nakamoto. Its existence is mainly to solve the consensus problem and ensure the validity and reliability of data. POW requires node hosts to solve a complex mathematical calculation and publish the record on the network as evidence. If the solution successfully meets all the expectations regarding the solution, the node can receive some token rewards and be recognized by the network. It is worth mentioning that POW requires attackers to first split the computational power of the network, because solving mathematical calculations requires a lot of time and computational power, and the computational power of the network increases as the system is used more, making such attacks very difficult. It is precisely because of this that the POW model can effectively prevent organized malicious attacks.
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For distributed ledgers, POW provides validity guarantees for data and achieves decentralization, making it secure in large-scale networks. Typically, blocks in the network are verified based on mathematical calculations, which makes the original data more secure because the data can only be recognized when the calculations meet specific requirements.
Disadvantages are also evident! What challenges do POW tokens currently face?
High security, high data guarantee, and the ability to achieve decentralization… These are all advantages of POW that cannot be ignored. However, in order to achieve these core advantages, the POW consensus mechanism also comes with corresponding costs.
Firstly, POW has a huge energy consumption. As mentioned earlier, POW requires host nodes to solve complex mathematical calculations. These difficult algorithms require a large amount of computational power to support them, otherwise the proof of work cannot be completed. This inevitably leads to massive energy consumption. How much impact does this high energy consumption have on the environment? Is it sustainable? These are questions we need to consider in the future.
Secondly, the POW mechanism has extremely high hardware requirements. If a POW token wants to be mined, it needs to be equipped with specialized hardware devices, which has a high entry barrier. This high barrier is not very friendly to ordinary investors and general users.
It is worth mentioning that although POW is intended to build a high-end game of “who has the right to prove”, there is a hidden danger behind it: once an entity controls more than 51% of the computing power, it may launch an attack on the network, which is a great potential risk.
Pay attention! What are the shining POW projects in the current market?
POW is becoming mainstream, and POW tokens in the market are emerging like spring bamboo shoots. Next, let’s take stock of the highly anticipated POW projects in the market this year.
KasLianGuai
KasLianGuai is a POW public chain built on the GHOSTDAG protocol. Compared with Bitcoin, KaLianGuai has an obvious feature, which is to change the structure pattern of the blockchain. Bitcoin adopts a single chain structure, while GHOSTDAG adopts a directed acyclic graph (DAG) structure: one block can point to multiple blocks.
KasLianGuai’s KAS token was launched in November 2021, with a total supply of 28.7 billion and a circulation of 19.8 billion, accounting for 69% of the circulation. Its market value has reached 750 million US dollars, and its FDV (fully diluted value) has reached 1.08 billion US dollars. Since its launch, KAS token has risen hundreds of times. This achievement is closely related to the strong development team and solid foundation of KasLianGuai itself. Currently, KAS token has a high market value (750 million US dollars), ranking around 60 globally.
However, investors also need to pay attention to the fact that although the future of KAS token is promising, there is a significant potential selling pressure. Early miners hold a large number of low-priced chips, and new chips are produced every day. If these chips are sold, it will have a huge impact on the price.
DNX
DNX coin is a virtual currency created by DNX Capital, which has built a decentralized financial ecosystem. The goal of DNX coin is to create a powerful management smart contract and decentralized financial service platform.
The technical features of DNX coin include smart contracts, on-chain governance, and anonymous transactions. Among them, smart contracts are the core of DNX coin, providing developers with a fast and efficient way to build blockchain-based applications. In addition, DNX coin provides a decentralized financial platform that offers financial services such as reinsurance, microinsurance, and P2P loans to users.
DNX coin has recently performed well and has become a hot new star, especially because it has the advantage of “resisting ASIC mining machines” that other currencies do not have. However, we still need to remind everyone that DNX’s future business scope will involve microinsurance, P2P, and other aspects, which may raise suspicions of “gray industry”. Before investing, everyone should conduct more investigations, research, and calculations.
The future development of POW, where will it go?
From the moment Bitcoin appeared, POW entered everyone’s field of vision, and now it has been 14 years.
Because it has been in the industry for too long, it has become the air and water of the industry, and it is a familiar existence for everyone. Perhaps it is because the starting point of POW is too high, and its subsequent performance rarely impresses people. There is a feeling of “peaking at the debut”.
However, there has always been a consensus in the industry regarding POW, which is “bear market watches POW”. This means that in a bear market, when various problems arise in the industry and various methods are not feasible, POW will once again enter the mainstream view and become the focus of attention.
After all, in a downturn, the main capital will withdraw from projects that rely solely on storytelling (in simpler terms, projects that are famous only for telling a good story without solid technology), and the remaining funds will become more pragmatic and gather around projects with objective value evaluation criteria, which are also related to POW.
