What Is Proof of Stake (PoS) Answered

First off, Proof of Stake (PoS) is an alternative consensus protocol to Proof of Work (PoW).

When cryptocurrency in 2008/2009, there was a problem up until then that hindered other digital assets that preceded bitcoin. It was called the Double Spend Problem. How do you make sure no one on the network spends the same digital asset twice? Well, one of the more answers is Blockchain Technology. Another answer is a consensus mechanism. Obviously, a consensus is a general agreement about something. With that said, a consensus in cryptocurrency is an agreement on who owns what and who sent how much to who.

Next question is, how do we implement this consensus? Through a consensus mechanism. PoS is a consensus mechanism. Like I said in the beginning, PoS is an alternative to PoW. There are other consensus mechanisms but PoW and PoS are the most popular.

In PoS, if you want to secure that particular network or blockchain, you would import that crypto’s coins into its wallet. Before I move on, securing the network means making sure the network is honest, running correctly, and all transactions are correct.

As an example to hit home what PoS is, I will be a PoS cryptocurrency. The crypto I will be using is Cardano (ADA).

Let’s say I have 100 Cardano. I would then download Cardano’s wallet, send the coins to the wallet and let them sit there. By doing this I commit my holdings of Cardano, or escrow them in a sense, to the Cardano network. By holding them in the Cardano wallet, the wallet knows that I am escrowing my coins and not spending them. The reward for doing this is winning the chance to forge a new block to Cardano’s blockchain and being paid in Cardano for doing so.

Facebook Comments
About Lynell M. Ghant 5 Articles
Lynell Ghant is a Blockchain & Cryptocurrency enthusiast and consultant. He is helping People and Organizations better understand Blockchain & Cryptocurrency. Lynell’s full video catalog explaining the two nascent technologies can be found on YouTube at Fool with Money and he can be contacted for business & consultation inquiries at FoolwithMoney@ProtonMail.com. Additionally, Lynell can also be reached on LinkedIn at Lynell M. Ghant