Despite Bitcoin pioneering a blockchain system operation that was revolutionary, its reliance on miners to validate transactions was by no means a full-proof system.

Mining has become a practice increasingly out of reach for the average person, going from a laptop-friendly exercise to an electricity and memory-hungry financial commitment.
As cryptocurrency has grown more popular, so has the requirements of a mining operation to successfully hash and contribute to the performance of a blockchain.

While Bitcoin and other popular cryptocurrencies like Ethereum have established systems with thousands of mining conglomerates maintaining their networks, smaller and less established cryptocurrencies do not have the luxury of enticing a network of miners relying on traditional systems.
Newly developed cryptocurrencies using a mining transaction approval system know there is a fine line in finding the balance building a network of miners big enough to support growth, while still enjoying the relative ease at which a blockchain can perform well with a low amount of users.
And while mining still provides the best decentralised and trustless system of transaction approval for a blockchain system, both miners and users understand there remains downsides to mining that are yet to be resolved.


Mining can be a very expensive exercise, partly because of the equipment required to produce decent results, but also thanks to the electricity required to run and maintain these complex systems.
After years of development and a fast rise and wider spread in use, mining more popular cryptocurrencies like Bitcoin and Ethereum is next to impossible for a single miner.
Today, Bitcoin and Ethereum miners work in large groups using expensive ASIC chips and huge servers.
These setups are generally found in massive warehouses with state-of-the-art cooling in countries with relatively low energy costs.
The cost of the equipment required to keep up with the growing rate of uptake on blockchain networks is amplified when it quite often becomes redundant in quick time, as technology battles to keep up with demand.
The mining model - otherwise known as Proof of Work (PoW) - also carries with it a minor risk of being manipulated by larger groups of miners.
If a group manages to gain control of 51% percent of a blockchain's network, through what’s known as a 51% attack, it can dictate which transactions are approved and which are rejected, removing the element of decentralisation.
This is of a particular concern for newly developed and small cap cryptocurrencies without established networks and large numbers of miners.

Some of the issues with mining networks and the inability or simple refusal of burgeoning cryptocurrencies to find the ideal balance between network size and popularity growth brought about a new type of cryptocurrency.
Non-mined cryptocurrencies work in a variety of ways - some even similar to the original Bitcoin concept.
However, they have all found different ways to validate their transactions before they are added to their blockchains, which in turn impacts their performances, behaviours and their decentralisation credentials.


Ripple, Stellar and EOS are three of the more popular non-mining cryptocurrencies utilising alternative systems of transaction validation, relying instead on those submitting transaction requests to stake their claims of legitimacy.
This system - known as Proof of Stake - sees those chosen to validate transactions put up funds alongside transaction requests as collateral.
If the transaction is faulty because of a lack of funds or an attempt of fraud, the transaction request is denied.
However, if a faulty request is approved, the rest of the network will quickly realise this upon checking, and the collateral is forfeited.

While miners receive a reward when they validate transactions and complete blocks, PoS validation workers do not receive the same type of reward.
The incentive for these cryptocurrency owners comes when they correctly validate a transaction, and they receive a portion of the fees attached to the transaction.
Those holding more of the type of cryptocurrency attached to the blockchain have a greater chance of being selected to validate.

The greatest benefit to a non-mining validation system is the lack of reliance on high-powered and expensive equipment to complete transactions, lowering costs.
However, there still remains a risk of blockchain monopolisation with a 51% attack.

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