If you have read my last blog post you will be aware of my intention to write 101 different ways to earn through cryptocurrency. That last blogpost covered proof of work GPU mining, if you haven’t already checked that out it can be found here: http://bit.ly/2rA1B6R
Proof of Stake
In this post I will be giving a general overview of proof of stake mining which has several benefits and advantages over proof of work – though it does have some pitfalls and disadvantages too.
If you don’t know what proof of stake mining is it is essentially a way for a distributed network to validate the next block in a blockchain which requires much less power consumption than proof of work. This is achieved by users and holders of the coin being selected to validate the next block. In fact, you may even here those selected referred to as validators. The way that this selection takes place is different for all coins. However, there are some common ways that the next validator is selected. This includes things like:
Staking age – the length of time that unspent outputs have been held in the users wallets. Most coins have a minimum time that they require users to hold coins in their wallets before they mature and are able to stake their coins. Additionally, some coins also increase the amount of coins that are awarded when a block is verified based on the length of time that the validator of that block has been staking their coins.
Staking weight – the amount of coins a user is currently staking in comparison of the number of coins being staked by all users on the network. For example, if there are 100 users staking one coin each then each user would have a 1% chance of staking the next block. However, if there are only 90 users staking one coin and one user staking ten coins then the user staking ten coins would have a 10% chance of validating the next block and receiving the award.
The video below on Cryptonauts Youtube channel gives a great overview of proof of work and how this compares to proof of stake.
For me, I can think of no better way to earn a passive income from my investments than through proof of stake. Essentially, I am able to benefit from the growth in value of my POS coins whilst simultaneously staking them in order to earn more coins. As long as the coins grow in value it is a WIN-WIN situation.
Now that I have given a brief overview of proof of stake and proof of work I begin to focus my blogs on specific coins. In my next blog I will be focusing on a little known coin called whale coin.
I have some interesting and creative ways that I am currently earning through cryptocurrency that I will be blogging about in this series and will be writing detailed guides in future posts. So, if you haven’t already subscribed please hit the subscribe button and resteem if you enjoyed the read. However, I am always up for diversifying my portfolio and strategies so, of course, I would love to know the different ways that you are investing and earning in this amazing field.
Long live the blockchain!
