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We’ll test your business knowledge in each issue of Lehigh Business.
We’ll test your business knowledge in each issue of Lehigh Business and give you an opportunity to win bragging rights and Lehigh swag. This Biz Quiz comes courtesy of Hank Korth, professor of computer science and engineering and director of the Blockchain Lab in the Center for Financial Services.
Question
Mining of the cryptocurrency Bitcoin (BTC) has been criticized for its high energy consumption due to its “proof-of-work” consensus algorithm. With the #2 cryptocurrency (as measured by market cap), Ethereum (ETH), transitioning from proof-of-work to a highly energy-efficient proof-of-stake algorithm‚ what are the 3 next largest (after BTC) cryptocurrencies supported by a proof-of-work algorithm?
Background
Ethereum is joining many other cryptocurrencies that use some form of stake-based consensus algorithm. These algorithms differ from proof-of-work in what risks a node operator must take to earn rewards for adding the next block to the blockchain. Proof-of-work involves repeated guesses to solve a mathematically hard problem in hopes of being the next node to succeed. Costs involve both the investment in computing capability and the electricity to power it. Proof-of-stake involves “staking” some amount of currency. That stake is held in escrow and can be seized by the system if the node fails to execute the consensus algorithm properly. The next node to add a block is chosen from those nodes staking currency. The specific method of implementing that choice differs among the various proof-of-stake blockchains. In the case of Ethereum, the resulting energy savings are over 99%.
Think you know the answer?
Submit your answer to lehighbusiness@lehigh.edu by Jan. 1, 2023. We’ll post the correct answer on https://go.lehigh.edu/lehighbusiness by Jan. 15, 2023. One winner will be randomly selected from all of the correct solutions and receive some Lehigh Business swag.
Our randomly selected winner from all of our correct submissions from our 2021 issue was Glen Schucker ’08. Congratulations!