Blockchain is a technology that records transactions that can’t be deleted or altered, and it has decentralized governance and operation – the people using the system get to collectively vote how to govern and operate the system. However, in most blockchain systems, users are anonymous and have no digital ID that can prove their identity. What, then, stops an individual from pretending to be many individuals and casting many votes? The most used method is proof-of-work.
In proof-of-work, users get votes based on the amount of computational power they have in proportion to other users and demonstrate this power by solving difficult mathematical problems. This method is extremely energy intensive, leading to complaints that proof-of-work is not sustainable. A new and much more energy efficient alternative is proof-of-stake. In proof-of-stake, users validate their identities by demonstrating ownership of some asset on the blockchain, such as bitcoins, for example. One blockchain company estimates that transitioning to proof-of-stake will reduce its energy consumption by 99.95%.