6 min read
What is Omisego (OMG) and how does it work?
In another previous article we already talked about Omisego and its OMG token, given its interesting features and purpose. Today I will tell you how to mine OmiseGo and how to earn OMG tokens.
If you have not yet read the dedicated article, below you will find a summary of what OmiseGo is and how it works.
OmiseGo is an Ethereum-based platform that aims to decentralize payment networks and create an open public financial system, thus overcoming some of the scalability issues that hamper the Ethereum network.
Based on the idea that, when it comes to making digital payments, money cannot easily move from one platform to another, OmiseGo seeks to provide a universal, decentralized solution that allows users to send money from any network to any network, ensuring lower gas costs and faster confirmation times.
OmiseGo uses the ERC-20 OMG token based on the Proof of Stake (PoS) consensus.
How to mine Omisego (OMG)?
Like many digital currencies, OMG has a limited supply of 140,245,399 tokens. At the time of writing, this supply has been fully minted and the majority of OMG tokens are already in circulation (140,245,398).
Of the total supply, 65.1% of the tokens were distributed to investors and 5% were distributed in an airdrop. 20% of the OMG cryptocurrency supply is locked in OMG Network’s reserve smart contract to fund future development and validation of the network, while 9.9% was reserved to compensate the founding team.
So, how can I mine OMG?
As I mentioned in the previous paragraph, unlike other cryptos (such as Bitcoin), Omisego uses the Proof of Stake (POS) system.
This means that OmiseGo cannot be mined and now I will explain why.
How does the Proof of Participation (PoS) work?
If you have not yet read the article on Staking in which I talk about the differences between Proof of Work and Proof of Stake, I will now briefly explain how Proof of Stake (PoS) works and how it differs from Proof of Work (Pow).
In the blockchain, when a transaction is made, it is included in a block (which is made up of a set of transactions).
For the block to be valid, it has to be confirmed by the network nodes or miners.
In the case of Proof of Stake, you will have to meet certain requirements to validate blocks. It will not be enough to have a wallet to earn OMG tokens. In fact, if your wallet is empty, you will not be able to confirm any blocks.
So, the OmiseGO wallet app is not only for sending and receiving money. If you want to earn OMG you have to confirm blocks and, to do so, you will have to own and store a certain amount of OMG tokens in your wallet.
Once you have a number of tokens in your wallet, validating blocks and confirming transactions will earn you a small commission (fee).
This means that the more coins you bet (the more coins you have in your wallet), the more fees you will receive proportionally from other users.
The reason you get paid more if you bet more tokens is because you assume a higher risk. And in case you want to attack the system, if you bet more tokens you can be considered a trusted node and the more compensation you will receive for block confirmation activity.
Then, if we compare the PoW and PoS systems, we find the following differences:
- In the consensus based Proof of Work system miners earn rewards for their work and when they solve a complex mathematical puzzle, they receive a certain amount of this cryptocurrency.
- In the system based on Proof of Stake, users who already have their cryptocurrencies stored in a Wallet are rewarded and, by generating new blocks and verifying the transactions, the winner is chosen at random, depending on the amount owned and wagered. The PoS system is considered much more profitable because it eliminates the hashing or mining process and ensures a much more decentralized and secure process.
- In PoW, hackers need 51% of the network’s computational capacity to validate a block and execute a 51% attack, which is highly unlikely but not impossible.
- In contrast, in the PoS system a hacker would need to own 51% of all the cryptocurrencies in the network to execute an attack, which is practically impossible.
How to buy Omisego (OMG)
We have reached the end and if you have decided to get OMG through your wallet, but you still don’t have OmiseGo tokens, remember that you can buy them easily and quickly on the Bitnovo platform.
Yes, you got it right! Bitnovo also offers you OMG tokens, which you can buy online or in cash at more than 40,000 points of sale throughout Spain, Italy, France and Portugal.
But, hurry up… there are very few left 😉
You’re already one step away from your OMGs!