Wednesday, October 27

Main Technical Differences between Tron and Bitcoin

Most cryptocurrencies are significantly different from each other, and no pair can demonstrate the possible magnitude of disparities better than Tron and Bitcoin. Let us expatiate on their main technical characteristics, exploring the differences between them.

Proof of Work vs Delegated Proof of Stake

What is Proof of Work?

Proof of Work (PoW) was invented long before Bitcoin. The concept dates back to 1993 when it was devised as a method to prevent DoS (denial of service) attacks and spam. The idea behind it is to request a user to perform some kind of work, resulting in a certain amount of processing time. This system was adopted in 2004 to secure digital money by a computer scientist from California, Hal Finney. 

In 2009, Bitcoin was introduced, becoming the most widely used application of Finneys’ work. Interestingly, he was one of the early Bitcoin contributors, as well as the very first person who has proceeded with the Bitcoin transaction. The sender was the creator of the cryptocurrency – Satoshi Nakamoto. 

Proof of work ensures security and enables decentralization, but it is not flawless. Creating new blocks, aka Bitcoin mining, is an energy-intensive process. The combined carbon footprint of all Bitcoin miners is now greater than the one of Argentina. At times of dire predictions regarding climate change, this issue becomes more pressing than ever. 

Bitcoin Mining Pools is another conundrum posed by Proof of Work. Mining pools are groups of miners who join efforts and agree to share block rewards proportionally to the mining hash power that each has contributed. It contradicts the idea of decentralization.

Proof of Stake and Delegated Proof of Stake

To withstand the aforementioned problems, new mechanisms were proposed. Proof of Stake (PoS) is a consensus mechanism that requires users to stake their coins for the chance to become the next validator. The higher the stake is, the more chances a user has to become the next validator. However, the algorithms consider other factors as well. If they don’t, the system will lead to centralization, with the richest person continually accumulating wealth. Tron has recently moved from Proof of Stake to the Delegated Proof of Stake mechanism. 

Delegated Proof of Stake (DPoS) is an advancement of the PoS mechanism. It was developed by Daniel Larimer in 2014. The main idea is that coin holders can vote for delegates who are then allowed to validate the next transaction. This enables greater speed and scalability. 

Different Protocols

A protocol is a program that forms the software of a network. Cryptocurrencies run on various blockchain networks with different functionalities. Whether you want to exchange trx to btc or buy a house, you can find a platform allowing for it.

The Bitcoin Protocol

The Bitcoin blockchain protocol was revolutionary 11 years ago when it was first introduced. It has resolved the dilemma of double-spending. As transactions are irreversible and recorded in a decentralized manner, no user can spend the same unit of digital currency twice. Some of the technology components include a digital signature, a cryptographic hash function, peer-to-peer (P2P) network, and proof of work algorithm.

The Tron Protocol

The Bitcoin protocol was built to enable cryptocurrency payments via a decentralized network. However, nowadays, many blockchain platforms are created with more ambitious goals in mind, allowing for greater functionality. Ethereum has pioneered this concept, introducing a platform that can be used by developers to create their own cryptocurrencies and decentralized apps. Tron protocol was created with even greater functionality in mind. The main two functions that are supported by the Tron protocol unlike the Bitcoin protocol are the smart contracts and aforementioned decentralized apps.

  • Smart Contracts

Smart contracts are self-executing contracts, written in a form of computer code. They eliminate the need for a third party. First introduced by Ethereum, they are now used in the Tron protocol. 

Smart contracts are already used by individuals and corporations to process asset transactions of high value. Several years ago, the Depository Trust & Clearing Corp. (DTCC) has used the technology to process about $1.5 quadrillion worth of securities. Smart contracts are versatile. With their help, you can even buy or sell real estate without a realtor. 

  • DApps

DApps or decentralized apps are applications with the backend code that runs on a decentralized network instead of servers. To be considered a DApp, an app should be open-source and operate on its own without a single entity in control. DApp must use a cryptographic token to ensure security. Arguably the most successful DApp today is a social media platform and a blogging site called Steemit. Steemit is peculiar, as it is using a cryptocurrency to reward users for their content. 

Final thoughts

Bitcoin and Tron are very dissimilar. The former is more universally accepted and considered by many to be more reliable. On the other hand, from a technical point of view, Tron has many advantages that make it more versatile, scalable, and, most importantly, environmentally friendly.