JAKARTA Proof-of-Stake (PoS) has become increasingly popular among the crypto community along with Ethereum (ETH) efforts that will make the transition from Proof-of-Work (PoW) to PoS. As is well known, Ethereum will carry out its transition in the phase of The Merge. Then what is Proof-of-Stake (PoS) in cryptocurrencies?
In this article VOI.id will explain the meaning of Proof-of-Stake and how it works. Before Ethereum, other cryptocurrencies such as Solana (SOL), Cardano (ADA), and others have already taken this PoS consensus mechanism. However, news on Proof-of-Stake is increasing after the second largest cryptocurrency by market capitalization, Ethereum, will switch to PoS.
Proof-of-Stake understanding
Launching Coindesk, Proof-of-stake (PoS) is a consensus mechanism used in blockchain to verify and validate cryptocurrency transactions.
Blockchain is a decentralized digital ledger. Blockchain itself is not regulated by intermediaries or centralized authorities such as the Federal Reserve System. Instead, blockchain consists of a global network of computer systems called nodes verifying and validating transactions.
PoS is claimed to be more environmentally friendly than PoW. The reason is, in PoS it does not allow mining activities using high-power computing devices like PoW. Instead, PoS presents a staking system, where the coin owner can lock up his ownership within a certain period of time to get a cryptocurrency reward.
As mentioned above, participants who lock or risk their holdings will be referred to as validators. The reason is, coins will be at stake to validate transactions that occur in the network.
Understanding Consensus Mechanism
It has been mentioned above that Proof-of-Stake is a consensus mechanism. While Proof-of-Work is the same. The consensus is a general agreement towards a set of guidelines, opinions, or principles. Similarly, the consensus mechanism is a protocol that is a set of rules or policies that blockchain adheres to when verifying and validating cryptocurrency transactions.
The consensus mechanism ensures that every transaction in the blockchain is recorded and every node on the blockchain network has access to a copy containing verified transactions according to the mechanism.
How Proof-of-Stake works
Blockchain is not controlled by any authority, therefore it is decentralized and not centralized. Therefore, there must be an approach to achieving consensus related to the legitimacy of crypto transactions. If not, blockchain can experience unwanted things, including double expenses, and fake transactions.
Blockchain with PoS consensus mechanism requires their nodes to lock or lock cryptocurrency for a certain period of time. In return, this node gets the opportunity to become a validator, which is an selected node that generates new blocks for blockchain and accepts the original cryptocurrency as a reward. The greater the number of cryptocurrencies at stake, the greater the chance of being elected as a validator. The PoS system has a framework that secures the network if the validator starts acting suspiciously or gets involved in fraudulent activities.
Proof-of-Stake and Proof-of-Work Differences
PoS does not use high computing devices, therefore PoS is claimed not to be energy-intensive and more environmentally friendly. PoS is a more suitable option as a consensus mechanism. The PoW-capable blockchain relies on miners to follow the protocol and does not violate consensus rules.
In theory, PoS strengthened blockchain defenses against a kind of "51% attack" in which attackers seized control of more than half of the blockchain. Hackers who manage to control blockchain can blockchain can block transactions, spend twice the cryptocurrency, and make copies of alternative networks.
While the Proof-of-Work or PoW consensus allows mining or mining. Bitcoin still uses the Proof-of-Work consensus mechanism. Karenya, it can be mined using a high-power computer device. The more computing devices for mining, the greater the electricity consumption used.
The revolutionary step was taken by crypto number two after Bitcoin, namely Ethereum. Ethereum developers plan to make a switch from Proof-of-Work to Proof-of-Stake in the near future.
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