Proof of Stake (PoS)

The Proof of Stake (POS) protocol is a class of consensus mechanism for blockchain that works by selecting validators in proportion to the number of holdings in the respective crypto.

Proof-of-Stake (PoS) is developed and used by a few alternative cryptos as an alternative to Proof-of-Work. Stakers—the PoS equivalent of miners—lock funds in a particular smart contract in the Proof-of-Stake architecture. When the network requires a new block, an algorithm provides a certain staker the right to publish the next block.

A valid solution to a cryptographic puzzle is required for the validators (miners) on PoW-based blockchains, such as Bitcoin, to receive payment. They can now add the next block of transactions to the blockchain if they can come up with a suitable solution.

Because Bitcoin mining is both expensive and very competitive, the network is safe (requires a vast amount of computation power). This is a drawback of the PoW approach, though, as there are numerous resources that are squandered and cannot be utilized in other ways.

The staker is chosen by a lottery based on each staker’s percentage of the total staked funds. Unlike Proof of Work (PoW) protocols, POS systems do not encourage excessive amounts of energy consumption.

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