Blockchain: what is a validator?

The term validator comes from English and can be translated into French by validateur. In cryptocurrencies, it is the name given to the people who are tasked with verifying transactions on certain blockchains.

To deepen the subject, we will explain the cryptocurrencies that work with validators, how to become one and the sums of money that can be pocketed by verifying transactions.

Are there validators on all cryptocurrencies?

Validators only work on certain blockchains, the ones that usually work with a system PoS (Proof of participation). In the case of digital assets that operate with a system PoW (Proof of Work), in this case it is a question of minors.

A PoW system has very high security. For example, Bitcoin, which works using this verification consent, has never been breached since its existence (cryptocurrency thefts occurred at the level of exchanges or via scams). On the other hand, it is a very greedy system in terms of energy resources.

PoS, on the other hand, is less safe than PoW, but allows for many savings in terms of electricity consumed. However, the most popular cryptocurrencies that use this consent manage to have more than acceptable security and so far there has been no major hacking that has jeopardized the existence of such consent.

There are several ways to become a validator in a PoS system. However, for the sake of clarity, we will try to summarize this in the simplest way possible, even if the reality is a little more complex and varies according to the cryptocurrency considered.

First, it requires you to commit some digital resources of the project to become a masternode. The amount to be committed varies at times from a few hundred euros to several thousand. In some cases, it is even possible to create a pool to form a masternode together.

The PoS system can be of the delegated PoS type. This means that you can commit your tokens to someone else and receive part of the profits that this person generates.

Obviously there are as many specifics as there are different projects using PoS, but overall these are the two most common ways to become a validator on a blockchain that needs these actors to operate.

Can you make a lot of money by being a validator?

Once again, it is impossible to say what sums of money can be pocketed because it depends a lot on the projects and the initial capital that can be invested.

Therefore, blockchains that require the commitment of a large amount to become a validator pay more. Unfortunately, in this case, you need to have the starting capital to get your ticket, create a pool to create a masternode or delegate your tokens to another validator.

When investments are low, the return on investment is also significantly lower. Furthermore, it may be mandatory to block your tokens for a long period of time, which can cause problems if prices collapse because it would not be possible to resell your tokens in time to limit your losses.

Conclusion on validators

Validators are the people involved in processing blockchain transactions that work with PoS consensus. The requirements to become a verifier vary from cryptocurrency to cryptocurrency, but you still need to commit the project tokens.

Similar to PoW blockchain miners, validators make money by verifying transactions. However, the amounts pocketed can vary from one cryptocurrency to another and sometimes it is necessary to make a large investment before you can become a validator by purchasing many tokens linked to the project.

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Nicola

I discovered the world of cryptocurrencies in January 2018. Arrived at the worst time to invest, I have never stopped training since then and now I share my knowledge in order to facilitate the adoption of cryptocurrencies.

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