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What is Proof-of-Stake

"Proof-of-Stake, or PoS, is a security method in cryptocurrencies. This means that the block will be created by the account with the largest balance. That is, the more coins you have in your account, the more likely it is to create a new block. The algorithm by which the block is created does not depend on the power of the computer.

Proof-of-Stake was first used in 2012 in the PPCoin cryptocurrency.

Its essence is to use the ""share"" as a resource. Proof-of-Stake determines which node, that is, the computer connected to the blockchain network, gets the right to create the next block.

More about PoS and what best coins to stake

How Proof-of-Stake works

If Proof-of-Stake chose the next block by account balance, then this would lead to unwanted centralization - whoever has more money would always have an advantage. Because there are several ways to select

You can predict which computer will create the next block by randomly selecting Nxt and BlackCoin blocks. Here we use a formula that looks for the lowest hash value in combination with the bet size. Because the stakes are public, each node can predict who will be next eligible to create a block.

But there are limitations here too. For example, the most chance of creating the next block appears after 90 days, and then this probability decreases. So very old and big stakes will not dominate the blockchain.

Thanks to the Proof-of-Stake algorithm, the network gradually produces new coins and does not consume much power.

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