In the cryptocurrency universe, Proof of Stake (PoS) is an alternative to Proof of Work (PoW).
While PoW seeks to guarantee that each network participant has performed a certain amount of work in order to receive a reward, Proof of Stake requires participants to prove that they are willing to guarantee the integrity of their participation by “risking” a certain amount of cryptocurrency in the minting process. Participants thus “stake” a certain amount every time they verify a block of transactions.
If the block is verified by other staking nodes, the block leader who first verified it will receive the block reward.
In practice, PoS works a lot like a trust fund where money is committed during a certain period in exchange for a return in the form of interest rates.
PoS is seen as an alternative to PoW because it uses less energy to mint coins and seems a lot more familiar to bond and treasury investors.
Cryptos using PoS include Cardano ADA, Dash, NEO, PIVX, OkCash, NAV Coin, Stratis and Reddcoin.
See Also: Proof of Work
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