Brian Armstrong, CEO and Co-founder of Coinbase, spoke about the new staking service provided by the platform for institutional investors, in an interview with Fortune’s Jeff Roberts.
Towards the end of March 2019, Coinbase announced that they would be launching for Proof-of-Stake cryptocurrencies, starting with Tezos [XTZ], the nineteenth largest cryptocurrency by market cap. The platform also announced governance support for the coin, along with Maker [MKR] protocol.
During the interview, Brian briefly explained the difference between Proof-of-Work [PoW] protocol and Proof-of-Stake protocol [PoS]. He stated that based on the bitcoin whitepaper released in 2008, bitcoin used computation power to verify every transaction that took place on the network, aka bitcoin mining.
However, the downside to this was that the network used a “lot of computation power and energy” to verify these transactions, which was not environment-friendly. There were challenges in terms of the scalability too, he added. This, according to him, resulted in the inception of several next-generation protocols and cryptocurrencies, which were based on the Proof-of-Stake algorithm, instead of Proof-of-Work.
Armstrong then explained the mechanism of Proof-of-Stake currencies. He said,
[…] you’re actually putting up your money [on] which group of transactions you think will be verified next. And if you’re right you get, your money back with interest, and if you’re wrong, you lose your money. And, so that’s what’s allowing these networks to come to consensus and verify all these transactions.”
Further, Armstrong added that “increasingly, we were seeing new protocols” using Proof-of-Stake. He added that “more than 50% of the market cap of coins” would be based on Proof-of-Stake, in the next few years.
The Co-founder noted,
“[…] if you just zoom out and like let’s look at where the crypto space is today right, a lot of people look at it and they say, ‘oh, the prices are down a little bit’. […] internally it might be winter for price [but] it’s actually summer for innovation. there’s never been actually a better time for crypto innovation right now.”
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Published at Wed, 03 Apr 2019 12:12:23 +0000
