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 people who are responsible for verifying transactions on certain blockchains.

In order to learn more about 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 operate on certain blockchains, those that usually work with a system PoS (Proof of Stake). In the case of digital assets that operate with a system PoW (Proof of Work), in this case we are talking about minors.

A PoW system has very high security. For example, Bitcoin, which works using this verification consensus, has never been hacked since its existence (thefts of cryptos have taken place 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 secure than PoW, but allows many savings in terms of the electricity consumed. However, the most popular cryptocurrencies that use this consensus manage to have more than acceptable security and so far there has been no major hacking that has jeopardized the existence of such a consensus.

There are different 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 pledge some digital assets from the project to become a masternode. The amount to be pledged sometimes varies 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 may be of the Delegated PoS type. This means that it is possible to pledge your tokens for someone else and receive part of the profits generated by this person.

There are of course as many specifics as there are different projects that use 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?

Again, it is impossible to say what are the sums of money that can be pocketed because it depends significantly on the projects and the starting capital that can be invested.

Thus, blockchains that require pledging a large amount to become a validator pay the most. Unfortunately, in this case, it is necessary to have the starting capital to obtain your entry ticket, to create a pool to create a masternode or to delegate your tokens to another validator.

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

Conclusion on validators

Validators are the people who deal with processing transactions on blockchains that work with PoS consensus. Requirements to become a verifier vary from cryptocurrency to cryptocurrency, but you still need to pledge project tokens.

Analogously to miners on PoW blockchains, validators make money by verifying transactions. However, the sums pocketed may vary from one cryptocurrency to another and sometimes it is necessary to make a large investment before you can become a validator by buying many tokens related to the project.

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Nicholas

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 share my knowledge in order to facilitate the adoption of cryptos.

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