The idea of cryptocurrency lies in financing accessible to everyone, regardless of what part of the world they reside in. This is where DeFi, short for “decentralized finance”, steps in. Previously known as “open finance”, this movement aims to provide access to financial services like savings, loans, insurance, trading, and more – all with the help of blockchain technology.
Last week, we started the SpectroCoin blog series educating on various crypto topics. Today, we are excited to continue by sharing some insight into DeFi and take a closer look at the benefits and challenges that come together with the term.
To keep their networks secure, blockchains reward people with cryptocurrency. There are various consensus mechanisms enabled to validate transactions on the blockchain. For example, Bitcoin uses a Proof of Work mining algorithm, while NEM has introduced a Proof of Importance system.
One additional alternative used by cryptocurrencies, such as Dash, Polkadot, Neo and Cardano, is the Proof of Stake mechanism, which is considered an energy-saving method to confirm cryptocurrency transactions.
In today’s SpectroCoin blog post, we are happy to clear up the confusion around the concept of “Proof of Stake” and share our thoughts about staking.