What are Crypto Validators?
Crypto validators are payment processing protocols for decentralized platforms. They are based on a consensus mechanism that a given blockchain network uses. Crypto validators are blockchain participants who work for the network to verify transactions.
In this manner, the validity of a given blockchain network is given network is confirmed and added in the block for storage on a distributed ledger. This brings transparency to the blockchain. Blockchain is a decentralized network or distributed ledger stored on various locations that are called nodes.
Each node has the ability to make new contributions to this distributed ledger. Since blockchains are decentralized, it means that they need a system to ensure that all transactions on them are legitimate. Crypto validators use consensus model to validate transaction records by reaching consensus among all nodes.
Each node on the network only validates data if it is accurate before adding it to the block. In this manner, only the transactions that get verification from majority of the blockchain can reach a consensus.
In exchange for working for the blockchain and verifying transactions, crypto validators are able to receive block rewards. In this manner, the blockchain network incentivizes independent actors to contribute to the network’s growth.
At the same time, blockchains also issue penalties for bad actors that offer inaccurate or manipulated data for verification. In some cases, the staked token reserves are revoked and in other cases threat actors may be permanently blocked from the network.
Types of Crypto Validators
The type of crypto validator is directly linked to the classification of consensus model that a given blockchain network uses. Here are some of the most popular types:
Validators on PoW Blockchains
Validators on PoW blockchains are validators are required to show the computational power or the work that they have invested to verify transactions on that network. Therefore, validators on PoW blockchains are called miners. Bitcoin is the first PoW blockchain network and has retained this consensus mechanism.
Miners use super-computers based on Application Integrated Circuit or ASIC mining farms. Each unit in a mining farm is a node and each node competes against each other to find the encryption key first. The first node to find the solution wins the block rewards.
Validators on PoS Blockchains
The second most popular type of consensus model is PoS. It allows nodes to stake or lock a given amount of native token on the blockchain in order to become validators. The locked funds are used as warranty to ensure that validators only verify the correct information.
Higher amounts of staked tokens increases the chances for validators to get picked for validating a given block. However, validators are chosen in a random order.
Validators on BFT Blockchains
There are many blockchains that do not use either PoW or PoS consensus mechanism. However, the blockchain still validates transaction on the blockchain using Byzantine Fault Tolerance or BFT.
In this manner, blockchains are able to reach majority consensus among nodes regarding the accuracy of a given transaction entry. In this manner, any falsified information or forgery is discarded.
Validators Vs Miners
Miners are also validators but they work for PoW blockchains. They do not have the obligation to stake tokens on the blockchain network as warranty for verifying transactions. Instead, miners have to show their proof of work and compete against other miners to find the verification key before everyone else.
On this account, miners tend to increase their computational ability by investing in ASIC and other types of fast-paced processors. However, PoW blockchains are often criticized for the utilization of massive energy that can be a hazard to the environment.
On the contrary, PoS allows nodes to become validators by staking a considerable portion of native blockchain token. In this manner, the validator nodes have a real-life stake invested to ensure that the transactions they are verifying are accurate. In case, of wrong information, the staked token reserves are slashed from the validator’s locked reserves.
The ability to lock tokens on a blockchain is created by smart contracts. Smart contracts are automation protocols that are triggered when certain conditions are achieved. In retrospect, miners and validators play similar roles with a few technical differences.
Crypto validators are active on various blockchains such as Solana, Ethereum, Polkadot, and Avalanche. However, the process of becoming a validator on these blockchains shares many similarities with the exception of some technical changes based on their native interpretation of consensus models.