AI Crypto intends to create a whole ecosystem and set an example by touching different aspects of the economy. The secret weapon that the team depends on is the Proof of Value (PoV) consensus algorithm rather than the more popular Proof of Work (PoW) and Proof of Stake (PoS) algorithms.

Prior to defining the key concepts of the Proof of Value algorithm, let us examine the more popular Proof of Work and Proof of Stake, to have a superior view on the main differences between all of them.

The Proof of Work founded in 1999, is the first blockchain system ever utilized, as it supports Bitcoin — the oldest cryptocurrency and blockchain-based project out there. We should offer credit to the PoW protocol for opening the door for all the cryptocurrency and blockchain ventures we have today, but as of now, it has become a burden for the world.

The PoW, similar to other blockchain algorithms,is connected to affirm transactions and create new blocks within a network. In the PoW system, the duty regarding this processes is on miners, who compete against each other to achieve the results and get rewarded for their work. In the primary years, there was no problem with this approach, and the protocol seemed to be actually fair. However, today, the challenge is so fierce that miners create entire facilities to convert energy into cryptocurrencies.

To tackle the problems of the Proof-of-Work, the blockchain developers came up with a new concept referred to as Proof of Stake.

The Proof of Stake developed by Andrew Miller in 2011, has an equivalent goal — to validate transactions and create new blocks. However, in contrast to the PoW, where miners have to solve mathematical problems, the PoS empowers block creators to be selected in a deterministic way based on their token possessions. However, the PoS has several drawbacks, as it creates a sense of monopoly and centralization, which is the contrary objective of what blockchain was intended for.

The Proof of Value consensus mechanism was developed in 2018 by Jaeho Seol, Sungjae Lee and team, in AI Crypto.

Based on the PoV principle, the AIC coins will be provided as remunerations to network participants who contribute with proper value that derives from the legitimate utilization of shared resources. When the ecosystem is misused and controlled for malicious goals, the participants will record damages by paying transaction fees. Thus, the PoV is based on contribution and genuine value, encouraging its participants to become responsible and motivated to share their resources legitimately.


Key Benefits of  PoV

The fact that the Proof of Value system has clear advantages that will be experienced by each individual of the AI Crypto Ecosystem is evident. Here are only a few of them:

The PoV makes the blockchain scalable and sustainable in the future, guaranteeing a fair distribution of value. For comparison, Bitcoin’s PoW began well, however, at this point, average miners would spend more than their potential reward, which is not fair.

The PoV framework encourages everyone to contribute rather than to hypothesize. In the PoV system, there is no wasted resource, whether it’s from GPUs or other hardware units.

The PoV system makes sure that the value is shared between the users rather than just owned. In the end, the Proof of Value concept guarantees a win-win situation for the entire AI Crypto community.


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Blockchain research analyst at Nvest Labs
Graduated as a Computer Science engineer from VTU in 2017. Currently pursuing my Masters in Software Engineering from University of Visvesvaraya College of Engineering (2017-19 batch). Interning as Blockchain research analyst at Nvest Labs.
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