Proof of stake is a mechanism that empowers a person to become a miner based on his coin holding. This means their power to become a miner depends upon the coins they hold. Proof of stake came after the famous mechanism proof of work which is a consensus formed based on a blockchain algorithm that forms a chain of blocks to confirm the transaction. 

In proof of stake, the miners stake their coin and the more coins they retain the more they have chances to become a stake. It works as a substitute or an alternative to the other mechanism. This technique was proposed in 2011. The coins are not mined in proof of stake but are rather minted or forged.

The nodes that work on the network are chosen randomly who end up becoming the validators for forging coins as in this mechanism miners do not exist. To become a validator, you have to add your amount to the network as per your affording as stake amount. If you want more information regarding this, you can go through the bitcoin Aussie system to better understand it.

The amount deposited is kept in the form of security. The more coins a validator gives as a stake amount the more chances, he gets to become a validator. Their work is to check the validation of the transaction and verify it to add it to the block. The validator’s stake money is used to make them loyal towards their work. If they do any hampering their stake money and position as a validator also gets in stake. The validators get a certain fee as a reward.

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  1. POS has validators working in its network whereas in proof of work it has miners working.
  2. POS validators have more chances in the network if they stake more coins than the other validator whereas in pow anyone can become a miner if he has got some advanced technology for mining cryptocurrency.
  3. POW consumes a lot more energy than POS electricity consumption is way less.
  4. The terminology used in both the mechanisms is different in POW it is called mining whereas in POS it is called forging or minting.
  5. As electricity consumption is meagre, POS becomes comparatively inexpensive.


As it is evident that mining a coin through the POW mechanism requires huge energy consumption that unlocks the puzzles through cryptographic calculations. For solving these puzzles, a high amount of energy is required.

But in proof of stake, this power consumption is addressed by the coin held by the validators. To escape the energy consumption, a miner has power to the miner as per his coin holding by not solving those mathematical algorithms that end up using high energy. For example, if a validator possesses 10% coins mine block in the same ratio.


Some coins that use this mechanism are ShadowCoin, Blackcoin, PeerCoin, Nxt etc. The famous coin Ethereum that works on the proof of work mechanism is also striving to shift to the proof of stake mechanism because of the energy-consuming issues.

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In today’s digital era, every person is trying to become a crypto trader. They are either investing in cryptocurrency or are becoming miners to create a new coin. But as we know many altcoins use different algorithms so it sometimes becomes tricky to figure out as to which mechanism. This topic talks about the proof of stake mechanism in brief and also distinguishes it from its rivalry.

I hope it gave you an idea about the proof of stake mechanism so that you can make better crypto choices in future.

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