What is Proof of Stake? Here's the Explanation!

Proof of Stake or PoS is a cryptocurrency term that often appears. Maybe there are still many who don't know what proof of stake is.

This article contains an explanation of PoS, the difference with PoW or proof of work, and crypto coins that use the PoS method.

Also Read: 5 Ways of Cryptocurrency Analysis for Beginner Traders

Explanation of Proof of Stake

Proof of stake or PoS is a method that aims to maintain the integrity or security of cryptocurrencies.

This method also prevents miners or users from minting additional coins that are not owned or earned by them.

PoS has the concept that the more coins a miner has, the more power to mine.

So, someone can do mining or validate transactions according to the ownership of the number of coins.

PoS is often an alternative to other methods, namely proof of work. PoS is the original consensus algorithm in the Blockchain mechanism and is useful for validating transactions and adding new blocks to the network chain.

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Proof of Stake is a Proof of Work Alternative

PoS is made to be able to correct weaknesses that exist in the system Proof of Work. In a PoW system, transactions that occur must have a maximum capacity of 1 MB (Megabyte).

Furthermore, there is duplication of the transaction on all crypto asset mining computers that have been verified in Blockchain systems around the world.

To verify all transactions that occur, crypto miners must be able to solve a mathematical equation, namely Proof of Work or PoW.

There are difficulties with verifying transactions using the PoW system. This is because the involvement of many computers and electricity consumption will certainly continue to increase.

This is one of the goals of PoS. PoS was created to cover the shortcomings of the PoW system.

As an alternative to proof of work, of course there are differences between PoS and PoW. The following are the advantages of PoS as a method of keeping cryptocurrency safe.

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Advantages of Proof of Stake

There are various advantages of PoS, one of which is energy saving and environmentally friendly. Miners do not need to sell coins in order to pay bills. Moreover, PoS also grants power based on a miner's coin ownership.

In addition, the PoS verification method is simpler and easier. This makes PoS faster and easier to provide Blockchain network facilities without expensive transaction fees.

Blockchain users with a PoS system can do staking and get passive income or passive income from staking.

For crypto application developers, PoS is also very profitable because users of these crypto applications do not have to pay more expensive transaction fees.

Also Read: Get to Know Compound Crypto and Its Advantages

Some Coins Using PoS System

Proof of Stake makes various coins using the PoS system, one of which is SOL or Solana.

Solana is a cryptocurrency or crypto currency that uses a combination of the PoS verification system and Solana's proof-of-history algorithm.

In addition, there are Cardano or ADA which use a modification of the PoS method and call it Ouroboros.

The next example is Terra, a cryptocurrency that creates a digital payment ecosystem with Blockchain. This PoS system from Terra can support the creation of a DeFi application ecosystem.

Thus the discussion about PoS, the difference with PoW, and examples of coins that use the PoS system.

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