Proof-of-Stake (vs proof-of-work)

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Cryptocurrencies use a ton of electricity because of mining. In recent years people started working on a different technique called Proof-of-Stake. Not only does it use less energy, it can also be more secure.

Proof of stake (PoS) is a type of consensus algorithm by which a cryptocurrency blockchain network aims to achieve distributed consensus. In PoS-based cryptocurrencies the creator of the next block is chosen via various combinations of random selection and wealth or age (i.e., the stake). In contrast, the algorithm of proof-of-work-based cryptocurrencies such as bitcoin uses mining; that is, the solving of computationally intensive puzzles to validate transactions and create new blocks.

Incentives differ between the two systems of block generation. Under proof of work, miners may potentially own none of the currency they are mining and thus seek only to maximize their own profits. It is unclear whether this disparity lowers or raises security risks. Under proof of stake, however, those “guarding” the coins always own the coins, although several cryptocurrencies do allow or enforce the lending of staking power to other nodes.

Eric W. is a self-educated ghost writer who for the past seven years has been involved in Blockchain, Cryptocurrency, and Digital advertising sectors as Project Director, Miner, and NRA (Network Resource Application).

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