The freshmen guide for the crypto class of 2025: Chapter 4

It took me some time to get convinced about the power of crypto lending. Crypto lending has existed for a few years but is only becoming mainstream now.

Lending & Staking 101

Proof of Work vs Proof of Stake

Proof of Work

Since it is fairly easy to create the first few hundred coins, Patosi the creator of PrimeCoin mines them himself. In fact, he goes to the extent of mining the first one million coins himself. Increasingly it becomes difficult to find the next prime and as the difficulty level increases so is the price of PrimeCoin. In fact, after a few years, the daily electricity consumed in the compute jobs which compete to find the next PrimeCoin is more than what small nation-states consume in the whole year.

Proof of Stake

It’s the gold rush era and you arrive as a prospector in San Francisco along with 100 miners who would help you with finding gold. You need tools, equipment, a panning kit, denim, etc. You go to Levi Strauss (yup, he was a real person) and tell him you want to rent these things. He says you need to provide some gold as collateral.

Now you have two choices, either you buy the gold from then open-market or you go to James Lick and borrow gold from him. You offer James 10% of the gold you mine as interest. This way you can leverage the amount of money you have to borrow 10 times more gold and James makes money on his idle gold.

On-line Staking vs Off-line Staking

Staking and ETH2

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This blog is mostly around my cloud-native & Environments-as-a-Service (EaaS) technology insights. I would throw some crypto wisdom here and there.

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Rishi Yadav

This blog is mostly around my cloud-native & Environments-as-a-Service (EaaS) technology insights. I would throw some crypto wisdom here and there.