What Is Proof Of Stake In Blockchain?
By Javanx3d on ALTCOIN MAGAZINE
A common question that arises when someone is new to cryptocurrency investing and use is what exactly is Proof of Stake (PoS) when it comes to the blockchain? In short, Proof of Stake is a consensus algorithm that a cryptocurrency blockchain uses to obtain distributed consensus over the network. For a currency primarily based on PoS, the node that is selected to create the next block is chosen via a combination of randomness, age, and or wealth or number of coins held. This differs from the original blockchain mechanism referred to as Proof-of-Work (PoW). A PoW blockchain uses mining which is the solving of a computationally intense problem to create new blocks on the chain and validate transactions and is used by Bitcoin. Since PoW algorithms require high computational requirements, cost more to run, and can sometimes be overcome by mining poos, PoS has become an increasingly popular algorithm for a number of cryptocurrencies on the market. It is also pretty common for most masternode cryptocurrencies to support PoS such as SWYFT, PIVX, and more. In these setups, masternode owners get the majority share of rewards, while users who simply want to “stake” their coins can earn rewards without as much up-front investment as owning a masternode takes.
