What is Proof-of-Stake (PoS)? | CryptoWallet.com

What is Proof-of-Stake (PoS)?

Proof-of-Stake is a mechanism for reaching consensus and confirming transactions on a blockchain. PoS was created as an alternative to Bitcoin’s proof-of-work (PoW) method.

While PoW miners compete to validate blocks based on their hashing power, PoS allocates blocks based on the amount of coins that a participant has staked (locked in for a period of time) in the system.

Which blockchains are Proof-of-Stake?

Ethereum, the second-largest cryptocurrency in the world will be moving from PoW to PoS in the near future, however at the time of writing it is still utilizing a PoW system.

Other high profile blockchain projects such as Cardano and Solana are currently using a proof-of-stake system. 

What are the pros and cons of Proof-of-Stake?

Proof-of-stake systems are less energy intensive than PoW blockchains. Some suggest that this is more environmentally friendly, however this is open to debate since PoW does not emit carbons by itself and generally uses energy that would otherwise go to waste in remote regions. 

A con of a PoS system is that it is arguably more susceptible to centralization and manipulation by insiders with large holdings of coins. Many PoS systems attempt to mitigate this but it is yet to be seen how this will play out over time.