Welcome to Altcoin of the Week, the column where I review and release an alt coin that I feel has some good potential for future gains. In the cryptocurrency space, we now have over 1’300 listed coins on Coinmarketcap, with more coming every single day; naturally, that means plenty of opportunity and money in picking the right horse. Please keep in mind that these are all speculative picks and none of these calls are anything close to “sure money”. At least, that’s what my lawyer tells me. This week we’re going to discuss some of the finer points of blockchain, and some functions that only it has – staking, and in particular, POSW.
What even is staking?
Most people in the cryptocurrency markets are pretty far removed from actually involving themselves with many of the features and utilities that actually make blockchain a viable and interesting product. The intrepid investor may have heard time and again about staking and masternodes, features which some blockchains choose to implement into their system. I’ll cover the first, and then move on to the second.
Staking is essentially locking up a given amount of tokens in order to receive a “staking” reward. The entire concept of staking was first suggested on the bitcointalk forum back in 2011, but the first digital currency to use this method was Peercoin in 2012, together with ShadowCash, NXT, and several others. Unlike traditional mining, where the algorithm rewards miners who solve mathematical problems with the goal of validating transactions and creating new blocks, with staking, the creator of a new block is chosen in a deterministic way, depending on the wealth of a given entity, also called a “stake”. This means that the more you stake, the more you earn, and coins have experimented with vastly diverse rates and methods of implementing the staking system. A coin with a 10% PoS reward means that in a year, you can average out a 10% gain in your given coin. Sounds lame right? Well, don’t forget that crypto markets on the whole are on the rise.
As an example, a DASH masternode used to cost less than 20’000 USD, and nowadays it costs over half a million dollars. If you had bought a masternode and staked just 10% that interest alone would have netted you 50’000 USD! Which brings me to masternodes.
Masternodes are essentially a levelled up version of staking – you put up a predetermined amount (decided by the devs of the coin) of coins to stake and off you go. Masternodes sometimes deal with more interesting computational tasks, so it’s not necessarily for everyone. Masternode hype is definitely something to watch out for. As an example, when ZCoin announced their Masternode implementation, coins went up over five times their previous price in a very short time span. Needless to say, Masternodes are super lucrative and getting one early on means great profits provided you can bag one in the early stages when things are still cheap.
POSW is a relatively new coin that’s only been around for about a year – their goal? To try and make staking and masternodes easier for everyone, and hopefully onboarding more mainstream users into the POSW system. The team has developed an innovative protocol called TPOS (Trustless Proof of Stake), which adds a delegation layer to fund management using triplet-based encryption. This means that Masternodes can stake your coins 24/7 whilst your computer is offline and your coins are in cold storage. The process is trustless because MN operators only have access to your wallet’s public and ‘shared’ key, whilst the private key is known only to you.
Taken from their rather simplistic whitepaper, we have this:
PoSW has devised a solution to the problems being faced by users of decentralized networks today: Trustless Proof-Of-Stake (TPoS). TPoS essentially allows users to own a stake in PoSW, a Proof-Of-Stake currency, and have any other node (merchant nodes) do the staking for them using their high-bandwidth continuous connectivity (to ensure maximal rewards distribution) while not having to share any spendable balance or private keys with the node owner. Your funds are yours and yours alone, and will safely and securely grow over time even while you sleep.
It’s not that useful right now…
Good things come to those who wait, were the famous words of Captain Crunch. While POSW developement up until this point has definitely been lacking some oomph, they have been steadily toiling away at their project, and good news is definitely on the way. As investors, we like to purchase things when they’re nice, boring, and cheap – that moment when nobody is talking about a project is often the most lucrative time to make an investment. POSW promises lots of things, and the results are beginning to show.
If that’s not enough for you, POSW is also one of the few coins that have a partnership with Ledger – you can actually buy and store POSW coins on the ever-popular Ledger hardware wallets (and if you don’t have one, please direct yourself to the link to the right).
Development and Roadmap
2018 will be the year when POSW really takes off, as they are finally going to be implementing a lot of the core features and utility that investors are looking for with POSW. With TPOS, it will become that much easier for new people to stake their coins in a secure manner without needing to run their computers all of the time (this is actually pretty annoying for most) and the upcoming Masternodes means that POSW could pull a move like the recent Zcoin or other aforementioned projects. Keep an eye out on the POSW roadmap for updates, as this is one project you don’t want to miss out on.
But hey, like my lawyer keeps telling me, this isn’t personal financial advice or anything.