What Is Proof-Of-Stake?

UniqArt
2 min readJun 7, 2022

Cryptocurrencies require a means to verify transactions because they are decentralized and not controlled by financial institutions.

A consensus mechanism is a way of validating entries in a distributed database while also keeping it safe. In the case of cryptocurrency, the database is known as a blockchain, so the consensus mechanism secures the blockchain. Proof-of-stake is a consensus mechanism for cryptocurrencies that allows for processing transactions and creating new blocks on a blockchain.

This approach is an alternative to proof of work, the original cryptocurrency consensus process, Proof-Of-Work. Proof-Of-Stake has grown in popularity as the public’s focus has shifted to the environmental impact of cryptocurrency mining.

Understanding Proof-Of-Stake:

Proof-stake minimizes the computing labor required to verify blocks and transactions, ensuring blockchain remains secure. Proof-stake modifies the way blocks are confirmed using coin owners’ devices. They put their coins up as collateral in exchange for the opportunity to validate blocks. “Validators” are coin owners who staked their coins.

The block is then “mined” or validated by validators chosen at random. Rather than employing a competition-based process like proof-of-work, this system decides who gets to “mine” at random. A coin owner must “stake” a certain amount of coins to become a validator. Staking is when you pledge your coins to be used for verifying transactions. Your coins are locked up while you stake them, but you can unstake them if you want to trade them.

Many validators validate blocks, and they are finalized and closed when a certain number of validators confirm that the block is correct.

Proof-Of-Stake was designed to reduce the scalability and environmental sustainability concerns surrounding the Proof-Of-Work (PoW) protocol.

(written by Catherine S Thomas)

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