PoS coins is currently my favorite ones to hodl. Passive income that I get from those, really valuable especially in the bear market. So “What is PoS?”
“PoS shares many similarities with PoW, but also differs in fundamental ways. As in any blockchain based consensus algorithm, the goal is still to achieve distributed consensus — to create a secure system whereby users are incentivised to validate other peoples’ transactions while maintaining complete integrity”. The miner won't win prizes for the block produced in PoS. Only wins the commission of transactions within the block. For this reason, miners working with this method are called “builder” (forger).
In the mechanism of PoS, miners do not compete against each other with the power of calculation. The more shares each miner has in the system, the higher the probability of giving the block creation task to itself. Every validator must stake a portion of his/her shares in the network. Staking involves depositing an amount of tokens into the system, locking it in and using it as a collateral to vouch for the block.
PoS has a great advantage in terms of energy consumption against PoW. In producing Bitcoin, tens of thousands of miners perform a quadrillion times a summary calculation for each block production and only one block is produced. However, a single miner selected in the PoS method will do this. This is a situation that will greatly reduce the enormous energy consumption. The criticism brought to this method is the risk of minimizing the distributed structure of miners and gathering new crypto money in large shareholders.
Another difference between PoW and PoS, is that unlike in PoW systems, the total amount of cryptocurrency units are usually created at launch in PoS systems.
“With a PoS, the attacker would need to obtain 51% of the cryptocurrency to carry out a 51% attack. The proof of stake avoids this ‘tragedy’ by making it disadvantageous for a miner with a 51% stake in a cryptocurrency to attack the network. Although it would be difficult and expensive to accumulate 51% of a reputable digital coin, a miner with 51% stake in the coin would not have it in his best interest to attack a network which he holds a majority share. If the value of the cryptocurrency falls, this means that the value of his holdings would also fall, and so the majority stake owner would be more incentivized to maintain a secure network.”
Staking POS currencies is definitely one of the best investments you can make. I believe, free reward is not bad at all for literally doing nothing and just keeping your wallet open.
What you think, please feel free to comment below!
Sources:
https://hackernoon.com/what-is-proof-of-stake-8e0433018256