What is Proof of Stake (PoS)?
Proof of benefit (Eng. Proof of Stake) is a consensus mechanism for processing transactions and creating new blocks on the blockchain. Unlike proof of work, where it is necessary to invest computational power to reach consensus, proof of stakes requires money or “stake”. If one of the validators behaves differently (trying to fool the network) from consensus his stake will be “burned”, that is, he will lose his money. In this way, all validators behave in accordance with the rules and the network remains secured. The biggest advantage of proof roles over proof-of-work is lower energy intensity, given that it does not use computing power to verify transactions. The downside is that so far no blockchain has been created that uses proof of stakes, and is decentralized as Bitcoin, in other words proof of stakes is slowly leading towards centralization.
Source: cointelegraph
How does Proof of Stake work?
Proof of stake reduces the necessary computing power to check blocks and transactions. In proof of work, computing power maintains the security of blockchain. Proof of stake changes the way blocks are checked using the roles of the coin owner, so it is not necessary to perform so much computer processing. The owners offer their coins as a guarantee – staking – for the ability to check the blocks, and in return they receive rewards. Validators are randomly selected to confirm transactions and verify block information. This system randomly selects who will collect fees instead of using the competition reward mechanism as with evidence by work. To become a validator, the owner of the coin must “stake” a certain amount of coins. For example, Ethereum requires 32 EThs that the owner needs to put on staking before becoming a validator. Blocks are checked by multiple validators, and when a certain number of validators confirm that the block is correct, it is locked and closed, that is, added to the network. The fact that it takes 32 EThs to become a validator of the network tells us that the process is quite expensive, at the time of writing this blog approximately $ 55,000, on the other hand some of the most effective Bitcoin miners can be purchased for $ 1,000-2,000. This directly leads to the centralization of the network since fewer people have the ability to verify the blocks.
Source: cointelegraph
Objectives of evidence roles
Proof of stake is designed to reduce network congestion and solve environmental sustainability issues that are associated with the proof-of-work protocol. Proof of work is a competitive approach to transaction verification that naturally encourages people to look for ways to get a head start, which contributes to increasing network security but also increasing energy consumption. The PoS mechanism seeks to solve these problems by effectively replacing computing power with a role (stake), whereby the network randomly assigns the ability to mine to individuals. This means that power consumption should be drastically reduced as miners can no longer rely on mass hardware farms with a single purpose. For example, Ethereum’s transition from PoW to PoS has reduced blockchain power consumption by 99.84%.
Source: cointelegraph
Certainty of evidence roles
One of the biggest threats to the security of all cryptocurrencies is a 51% attack (Eng. 51% attack), and thus represents concern when using PoS, but it is highly unlikely that this attack will occur. In a PoW system, a 51% attack occurs when one entity controls more than 50% of the computing power in the network and uses that majority to change the blockchain. In the PoS system, a group or individual would have to own 51% of the total amount of “stakeane” cryptocurrency, and this is quite expensive. In Ethereum’s PoS system, if a 51% attack occurs, honest validators in the network can vote to reject the changed blockchain and burn (Eng. Burn) the amount of ETH possessed by the perpetrator. On the other hand, the fact that validators can reject changes tells us that the network is slightly more centralized than Bitcoin where changes like this cannot be rejected. It is up to you to assess whether this centralization is positive or negative.
Source: cointelegraph
Conclusion
Proof of stake is a consensus mechanism used to verify transactions on the blockchain. It is fundamentally different from proof of work, primarily because it encourages honest behavior by rewarding those who use their cryptocurrency as a bet to earn money, instead of distributed computing power. This mechanism has its advantages, but also the disadvantages that we have listed in this blog. We are certainly interested in your opinion on which of these two mechanisms has more advantages, that is, which one is superior to you. You can share your opinion with us on our social networks (Instagram, Twitter).
Until next blog.
