What is a Hybrid Blockchain in Cryptocurrency?
Ever wondered what is a hybrid Blockchain? If so, keep reading to get a good grasp on the concept and understand what makes it unique.
What is a hybrid blockchain?
A hybrid Blockchain is a Blockchain that uses two different reward mechanisms to reach consensus within the network.
PoW was the first consensus mechanism that was largely adopted in the Blockchain industry but has since shown some flaws, especially when it comes to scaling and high energy consumption.
PoS addressed successfully some of these problems but introduced its own issues, like the obligation to lock your cryptocurrencies to participate in the network and earn rewards.
A hybrid Blockchain’s goal is to reap the benefits of both PoW and PoS, with none of its faults.
How do hybrid blockchains address other blockchains’ problems?
Where PoW and PoS provide a single reward system, a hybrid Blockchain combines two different reward mechanisms into one. As such, the reward goes to the person either by mining or by staking cryptocurrencies.
This versatile solution diversifies how one can use and accumulate rewards on the hybrid Blockchain.
In this system, users can mine coins, then spend, trade or stake them as they see fit. Additionally, they can participate in the reward system just by buying some of the native cryptocurrency and stake it for passive income.
Finally, this combination of reward mechanisms increases the security and democratization of the network. It achieves this goal by providing greater decentralization and lowering the power of mining pools and whales.
What are some hybrid Blockchain examples?
Until now, there are only a few blockchains that have adopted a hybrid PoW/PoS mechanism.
The most popular hybrid blockchain is Decred, which merges the PoW/PoS mechanism to award users that either mine or stake the DCR cryptocurrency.
In addition to mining, Decred users can participate in the network by staking their coins and get a percentage of the rewards just by owning some of the native cryptocurrency.