What is Proof Of Stake (PoS) in cryptocurrency?

Introduction

Whenever there is a transaction in cryptocurrency, miners check that transaction every moment, whatever transaction happens in the network, and after checking it, add it to the blockchain.

Now such a mechanism is needed to protect that blockchain and network, which is decentralized and transparent so that no one person or organization can control it.

Now in such a situation, two types of Consensus Mechanism are quite famous, first Proof of Work (PoW) which we have already talked about, and a Proof of Stake (PoS) which we will talk about in this article.

We will know what is Proof Of Stake? How does it work? What is the difference between Proof Of Stake and Proof Of Work? So by reading this article from beginning to end, you are going to get to know a lot.

What is Proof Of Stake?

In proof of work (PoW), where mining requires a powerful computer and a large amount of electricity, due to which it is having a terrible effect on the environment. The most famous cryptocurrency works only on Bitcoin Proof of Work.

The same Proof Of Stake works just the opposite. Mining in PoS does not require such a powerful computer and electricity. For this, the miner only needs to hold that cryptocurrency in Stake or in simple language, then hold it in the Crypto Wallet, which he wants to mining.

In PoS, whatever cryptocurrency the miner holds in his wallet, whether it is Trust Wallet, Atomic Wallet, or Binance Exchange Wallet, he gets interested in it, along with whatever fees are there in the transaction of that cryptocurrency. The fee paid by the person doing the transaction is also received by the minor.

Now, most of the cryptocurrencies that are coming into the market work only on Proof of Stake. Big cryptocurrencies like Cardano, Polkadot, Binance work on PoS. If you want to become their miner, then you have to hold their coins, and only then you will become their miner.

Ethereum, the world's number one largest blockchain platform, which till now worked on PoW, is also now moving from PoW to PoS after the Ethereum 2.0 update.

Where you will neither need that much electricity nor a powerful computer to become a miner of Ethereum, for that you will have to keep at least 32 Ethereum stakes.

What is the difference between Proof Of Work and Proof Of Stake?

• Proof Of Work Mining requires a powerful computer and a lot of electricity. According to a report, Bitcoin mining uses so much electricity in a year as much as a year in the UAE, Netherlands, Ireland Like countries don't even use it. Which is a matter of concern for the environment.

Mining in the same PoS does not require such a powerful computer and so much power. In this, you only need to stake the cryptocurrency you want to mine.

• If you do not have an excellent system, which type is required in PoW, then forget that you will have time to do mining. And a lot of money is required to buy this type of system. Because of which, it is not so easy to become a minor in it.

In the same PoS, the system automatically selects the miner, who would have put the most coins on stake. The system gets the first opportunity to do mining, after that the number of the rest of the miners comes.

• In PoW, the miner is rewarded for mining the block, as well as the fees people pay on the transaction for using the network. They also get it.

But in PoS, the miner does not get any block reward, he only gets the transaction fee.

• In the PoW system, if the hacker wants to attack the entire network, then he should have 51% mining power of the entire network, then he will attack this system.

In the same PoS, the hacker will have to stake 51% of the coins to attack the entire network, which is an impossible task, for this the hacker will need a lot of money.

Same if he gets that money, and he buys up to 51% of the coins from the open market, then because of that the value of those coins will also increase, and in the end he will have to spend as much as he will not even benefit.