How does PoS mining work: full review
PoS is an alternative consensus algorithm, in which the miner’s income depends on the balance on his cryptocurrency wallet. Any network member with a positive wallet balance can participate in generating new blocks.
The right to generate blocks is distributed among all existing coins. Thus, the more coins — the higher the probability of generating a new block and getting a reward. For example, the owner of 1% of all coins will generate 1% of new blocks. Different cryptocurrencies have different sizes and reward distribution mechanisms.
This is very similar to a bank deposit: you keep coins in your wallet and get passive income. At the same time, PoS-mining (staking) does not require farms — cryptocurrency mining takes place on a regular computer or smartphone.
POW vs POS mining
If your choice fell on Proof-of-Stake mining, which is quite logical, it is worth understanding its principles. At first, all operations are protected and initially, when considering the characteristics of the algorithm, it was difficult to predict the possibility of investment. The cost of equipment is not taken into account at all during the work with cryptocurrency. The level of income in this case depends solely on the available coins.
The advantage of the PoS-mining algorithm is a high degree of security. The organizational structure makes attacking on a PoS-based system unprofitable. In some cases, a criminal who wants to commit an attack on a coin is among the victims, because the cryptocurrency loses its stability and value.
Algorithms are constantly compared, because they are the basis of the modern cryptocurrency market. PoS has several obvious and useful advantages in a detailed analysis:
- Increased validation speed.
- Reduced costs for the organization of protective functions.
- Decreased commission fees.
PoW, for its part, is characterized by high resistance to various types of attacks. The downside of Proof of Stake mining is some risk of forming a centralized system due to the fact that all users strive to collect the largest number of assets in their hands to get the maximum income.
After entering the market of devices for industrial mining, other cryptocurrencies are not immune from falling under the control of financial groups.
Advantages of PoS mining
Mining cryptocurrencies using the PoS algorithm has a number of advantages:
Low entry threshold
PoW mining requires the purchase of expensive equipment. To build a mining farm on 10 video cards, you will have to spend about 5–10 thousand dollars. Do not forget about electricity, because the meter values will go through the roof. Of course, electricity can always be “borrowed”, but miner-thieves can face large fines.
PoS-mining is much cheaper and can be quite budget-friendly — especially when buying new coins that have not yet managed to grow in price.
No special skills required
PoS miners do not need to build, configure and serve farms. The whole process boils down to installing a wallet and buying cryptocurrency. If you don’t like tinkering with hardware, staking is just the thing.
Space saving
A staking wallet takes up space on your hard drive, not in your apartment. This advantage is especially important for those who live on a small living space and can not afford to rent space for farms.
Fire safety
Home PoW mining can cause a fire, while staking is absolutely safe — it can be done even in homes with old wiring.
There is no cost for the repair and maintenance of equipment
According to statistics, about 5% of video cards break down within a year and a half after the start of mining. In another 4 years, a little more than half of the devices will remain operating. To keep the farm in working order, you need to change or repair burned video cards, which leads to unavoidable expenses.
Disguise
Governments of many countries plan to tax miners and force them to mandatory state registration. Authorities will find the owners of farms by electricity bills. Fortunately, PoS mining has almost no effect on the meter values, so your activity will remain undetected.
The way PoS mining works attracts users and experts. The system looks more economically attractive and rational. At the same time, the PoW algorithm looks more advantageous for working with large blockchains. Therefore, everyone is concerned about when the Ether will switch to PoS mining — this rumor arose about three years ago and continues to be discussed in the industry, becoming overgrown with new facts.
QOOBER Blockchain
Meanwhile, the market is already full of coins that work on this technology — Cardano, Pivx, Stratis, Reddcoin. These coins are more than one year old and they have managed to soar and fall in price. I am a supporter of new technologies and am constantly looking for new, profitable types of earnings on PoS coins.
Recently I came across a new QOOBER blockchain and their QOOB coin, which uses an improved type of coin mining — paramining. This is every second PoS + referral connections between wallets, which are established immediately after the first transaction. Now the project has just started, but they have already entered the BTC Alpha exchange with respectable volumes, and the coin has grown by more than 130% in 2 days. I think now you can buy this coin and transfer it to a web wallet for further staking and receiving passive income. This is not investment advice, but an excerpt from my long-term practice in coin staking, but only you make a decision, good luck!