Creditcoin, a pioneering platform for real-world asset innovations that enables unbanked consumers to build a credit history on Web3, has announced the launch of the latest upgrade of its mainnet. This new release upgrades the RWA-focused blockchain consensus to nominated proof-of-stake (NPoS) and aims to improve on-chain liquidity for both borrowers and fintech lenders, emphasizing the principles of auditability, transparency and trust.

Proof-of-work (PoW) was the consensus mechanism that started it all — with Bitcoin (BTC) introducing the concept to millions when it launched back in 2009. But as concerns over electricity use and carbon emissions grow, many crypto projects are now seeking eco-friendly alternatives.

In 2022, after years of complex technical work behind the scenes, Ethereum made the leap to proof-of-stake (PoS). At the time, developers said this would single-handedly slash its CO2 output by 99%. Not only was this designed to make the network more palatable in the eyes of critics and regulators, but it also set the stage for enhanced scalability and lower fees.

These days, PoS is regarded as the “gold standard” for most blockchain networks — especially now that it’s less novel and proven. And a twist on this model is nominated proof-of-stake (NPoS), which broadens the number of people who can help secure the network.

PoS vs. NPoS: Key differences

While both of these consensus mechanisms share the same cryptographic principles, there are subtle differences that need accounting for. Whereas PoS has validators alone — who replace miners and stake their own funds for a role in securing the network — NPoS allows token holders to get involved as well.

These token holders are referred to as “nominators” who can back honest and trustworthy validators by staking cryptocurrency to vote and elect them. This removes substantial barriers to entry for everyday enthusiasts because they don’t need dedicated hardware or tens of thousands of dollars and a coding background to receive rewards.

One slight downside of pure PoS lies in criticisms that it risks becoming overly centralized, with a small number of validators responsible for a large chunk of network activity. This subsequently sparks concerns that some transactions could be censored. On the other hand, NPoS offers a check and balance against this by sharing power with more people — boosting decentralization and accessibility in the process.

Real-world loans on-chain

Creditcoin 2.0+ — which allows real-world assets such as credit loans to be brought on-chain and unlocks financial services to consumers in emerging markets — now uses NPoS following its latest upgrade.

This consensus mechanism makes it easier for fintech lenders to set up their own nodes while increasing the network’s overall transaction capacity. This is a crucial step in futureproofing infrastructure, so it lasts for years to come.

But the hard work doesn’t end here. In the long term, the next upgrade — Creditcoin 3.0 — will deliver universal smart contracts. This interoperability layer will connect many layer-1 networks, not to mention compatibility with the Ethereum Virtual Machine (EVM). This will unlock a new generation of use cases and markets for real-world assets spanning multiple chains.

🤝 Creditcoin | Why your participation matters! 🤝

Creditcoin 2.0+ is set to deliver vastly improved real-world performance, security and decentralization, for both our community and various institutional partners.

The new NPoS system employs two different network consensus… pic.twitter.com/MI11EcS8HR

— Creditcoin 🐧 (@Creditcoin) September 7, 2023

So users can try out NPoS for themselves, participants are being given native tokens so they can try nominating validators. Those who get involved will automatically become part of a prize pool.

According to Creditcoin, there’s a lot of buzz surrounding the industry of real-world assets — but this could take years to come to fruition. Despite that, Creditcoin has not only pioneered real-world loans on-chain but has also demonstrated true blockchain utility, particularly in emerging countries. The project has been collaborating with financial institutions since 2019 so loans can be brought on-chain. So far, it has executed over 4.2 million loan transactions worth $79.7 million using this infrastructure, benefiting 337,000 customers, most of whom are in emerging economies.

After years of being shut out by banks, emerging countries can cultivate decentralized credit reputations and drive their own personal finances, boosting their local economies.

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