A Proof of Stake system requires the prover to show ownership of a certain amount of money, or stake. Proof of Stake works similarly to PoW (Proof of Work) except that instead of computers validating the network and receiving rewards equivalent to their relative computing power, PoS uses token holders. Those who hold tokens can “stake” their tokens (staking means to temporarily place the tokens in a locked smart contract — until staking is over) and in exchange, confirm transactions and receive rewards based on the relative number of tokens held.