What is PoS and what are the main features of PoS?
In a nutshell, Proof-of-Stake (PoS) is a type of consensus mechanism used by certain blockchain networks to achieve distributed consensus and validate network transactions. The list below highlights the main features and advantages of Proof-of-Stake blockchains.
- Network security
- Economic Incentive
With decentralization being the core of blockchain technology and cryptocurrency, there’s no central interference to manage a blockchain’s record of transactions and data. Instead, the network relies on an army of participants, which anyone can join, to validate incoming transactions and create new blocks on the blockchain.
What are Proof-of-Work (PoW) and the "mining" process?
But not all Blockchains run on PoS. Some tokens such as BTC are built on Proof-of-Work. Proof-of-Work (PoW) is a type of consensus mechanism used by certain blockchain networks to validate transactions and create new blocks on the blockchain.
In PoW, users compete to solve complex mathematical puzzles, and the user who solves the puzzle first is rewarded with a certain amount of cryptocurrency. This process is known as "mining".
Below is a graph that displays how much energy a blockchain built on Proof-of-Work (PoW) may consume:
While Bitcoin's PoW processes just 7 transactions per second, Ethereum's PoW can process 15-20 transactions per second. One should note that developers can only build sophisticated DeFi apps on top of Ethereum if the underlying protocol itself is scalable enough to sustain it. This is why many believe the transition to a PoS system is necessary for the overall evolution of the crypto ecosystem.
Since ETH became PoS, the energy consumption of the network was reduced by ~99.95%. The goal now is to increase the transactions per second to 1000+ which will help ETH become a more scalable network and make applications faster and cheaper to use.
Here is a step-by-step article on how to stake your crypto: How do I Stake my cryptocurrency