Tezos is a Proof of Stake (PoS) blockchain where, unlike the case of Proof of Work-reliant Bitcoin, transactions are validated on the network by a process humorously known as “baking.”
Typically, for a blockchain which relies on a PoS algorithm, the process of block validation is called “staking”. However, Tezos is a project which originated in France, a country famous for its baked goods. Consequently, the Tezos coins are grouped into “rolls” for the staking rights selection process, and that’s why the term “baking” became a natural fit.Is Baking the New Mining?
In the early years of Bitcoin, it was possible to configure software on a reasonably-powered desktop computer to participate in mining on the network. It was a way to actually earn new bitcoins without any serious investment in computer hardware. The year of 2014 was fairly pivotal for Bitcoin mining as the difficulty of math calculations to validate new blocks began to significantly increase, meaning that smaller mining operations would have to begin investing in equipment. Those that did not keep up ended up falling by the wayside, as larger and more sophisticated mining operations captured the market.
If the goal of cryptocurrency is to be a decentralized ledger, owned by no single individual or group of individuals, then the ability for more and more unique participants to help secure and enable the network is essential in order to retain objectivity. The result of increased Bitcoin mining difficulty and mining consolidation has produced, in some instances, lopsided control of the Bitcoin network. It also shut out individuals and hobbyists along the way.
According to Jonas Lamis, Founder of Tezos Community, the largest public Tezos delegation service, the “rewards generated from baking are the first ‘killer app’ for Tezos,” and nearly 80% of “all the activated Tezos [coins] are currently generating rewards through baking and delegation.”Baking is like mi...