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What Is Proof of Stake ? (Explained)

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Avatar for Ashma
Written by Β Β 461
10 months ago

If you've read somewhere about cryptocurriencies, specially Bitcoin, I guarantee that you've encountered with the term called 'Bitcoin Mining' (Am I right ? ) at first you'll thought now how to mine Bitcoin from computer with hammers and other stuff (that'll be silly πŸ€ͺ). But after reading you should understand that it's not like traditional mining.

At first there was a mining method called 'Proof Of Work' but this mining process is very energy consuming and also very costly in case of Bitcoin, but there's another consensus, that is 'Proof Of Stake', so we'll discuss about it and some other general things about crypto mining.

So let's dive in...!!

What Is Mining & Why It's Important ?

I'll keep it short, crypto mining means that, to solve the very complex and difficult algorithmic puzzles with the help of high quality hardwares. Simply this is what crypto mining is.

And now why it's important ? Well the puzzles are need to be solved to complete the transaction of cryptocurriencies, to verify that transactions. And another thing, that by mining, more cryptocurriencies are brought into the market, which increases the coin supply.

What Is 'Proof Of Stake' ?

Initial method of mining cryptocurriencies was 'Proof Of Stake' but it was very inefficient in various ways, so the the several members of Ethereum community are proposing a radical shift in how the cryptocurrency is mined that could change the cryptocurriencies and their future. Then there's is the rise of Proof of Stake.

Proof of Stake is the new mining consensus which is developed for replace the previous 'Proof Of Work' mining. As the previous'Proof Of Work' mining consumes lots of energy and also requires the high quality hardwares. But the 'Proof Of Stake' very different from it.

Actually in 'Proof Of Work' the mining reward goes to the first miner whoever solves the puzzle first. But in case of Proof of Stake the network itself chooses who will mine the new block on the basis of the how invested they're in the community. This technology of choosing miners is known as Casper Protocol.

Let's understand with following scenarios :

πŸ’΅ If you hold 10 ETH in the network and other members only hold 5 ETH then you're likely to be chosen to mine the new block of the blockchain.

⏳If you hold 10 ETH in the network for 1 year and some other new member also holds the same 10 ETH in the network but only for a month then you'll more likely to be chosen as the next miner.

So in this way the how much ETH you hold in network and for how long you'll be chosen. The system rewards who have greater stakes in the ecosystem.

The Future

Ethereum is not the only cryptocurrency who adopted this mining method but there are other cryptocurriencies like BlackCoin, NxT, ShadowCash and many other has launched their version for Proof of Stake.

This is just the beginning of this method, it helped crypto ecosystem to bring/attract more miners which will definitely help to scale the cryptocurriencies and to develop the network to perform thousands transactions per second (that's my personal opinion πŸ€ͺ)


Hope you all enjoyed my article and found it informative. If you really liked it and want to get notified for my future articles then please subscribe me.

Thanks for your time and appreciation...!!

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Avatar for Ashma
Written by Β Β 461
10 months ago
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Comments

oh that's what it is about... Nice, thanks!

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10 months ago

πŸ‘

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10 months ago

I just came to know about bitcoin mine..before that i had no experience on it..thanks for sharing this..β™₯️β™₯️

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10 months ago

Thanks alot at least am cleared about all this proof of work.

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10 months ago

I'm glad to hear that but what about PoS ? πŸ€ͺ

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10 months ago

Really good article. Nice to see some persons who need to explain that stuff. Its really necessary

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10 months ago

Thank you very much @rebeluch

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10 months ago

Bitcoin mining is one popular word I haven't really known how it works till I read your article. Thanks for the knowledge

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10 months ago

Bitcoin mining works on PoW & I think I've explained PoS πŸ™„πŸ€ͺ thanks

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10 months ago

Nice article

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10 months ago

OK, I got it. Thank you

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10 months ago

Proof of Staking is when user gives the blockchain system his coins, and while the system uses it, for that user gets the reward. So that means just by keeping the Coins in your staking wallet you can get reward from that coin.

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10 months ago

Something like that πŸ˜… @Khushi_ah

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10 months ago

Something like that πŸ˜… @Khushi_ah

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10 months ago

Nice explanation @Ashma

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10 months ago

I honestly thought that mining mines your info or something in your device that's why i don't try itπŸ˜…

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10 months ago

The best post I have read today... It worth sharing for others to see what they ought to know about staking

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10 months ago

Ohh that's really big thing for me. Thanks for your words @Diamondrich

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10 months ago

Thanks a lot. If i have had some tokens, i would have tipped this post. This is amazingly informative. I now got to know more about PoW and PoS.

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10 months ago

Very important topic and nicely described. Thanks.

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10 months ago

You're welcome

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10 months ago

Such an informative post my dear πŸ˜€thanks 😍😍

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10 months ago

You write a very informative post which is useful for every cryptolover.... Thank you so much for sharing this post

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10 months ago

Very informative. I have to take note of this.

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10 months ago

Ohh, thank you so much for this dear, this is way more easier to understand.

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10 months ago

Very well said but i must noted one point here PoS has a disadvantage of leading to Centralization if small players are drop out eventually..

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10 months ago

Yes that's really a good point @CryptoSmart , but I think as the PoS grows and gets popularity and many coins adopt it then there's also a chance for new community/smart contracts driven initiatives to perform PoS which will provide decentralisation. And one more thing, PoW is more centralised than the PoS in my opinion, cause in case of PoW the first one who solves the algo gets all the rewards. And there are only 2-3 companies who makes such type of high level hardwares, and as the difficulty increases the small players will be automatically kicked out off the game, which will create the monopoly.

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10 months ago

Yes i agree with your points as both has the more or less technical advantage. So to counter it, Hybrid PoW/PoS has a mechanism to eliminate these problems as the next solution. Example- in PoS if the chain is forked, miners/forger get advantage on both chain as it was supposed to be a single chain for the staking consensus mechanism while in case of PoW forked chain, miners decides which chain is legitimate to follow (chain that has most PoW).

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10 months ago

Well I think it's long way for hybrid, let's hope for the best @CryptoSmart it's really nice to chat with you

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10 months ago

Yes..that's better..πŸ˜ŠπŸ‘

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10 months ago

πŸ‘

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10 months ago

You are most welcome for this one. I gather information about cryptocurrency. So, this article is a great help for me.

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10 months ago

I've never really understood what it meant to mine Bitcoin, I only knew of the few online games you play to earn Bitcoin. Proof of stake seems more..... Relaxing. But then it'll be hard for new users

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10 months ago

Yes, it's actually very complicated. To understand it properly, you should have better understanding of algorithms and hardwares. I just shared an overview here

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10 months ago

Alright thank you❀️. At least I have better understanding than before☺️❀️

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10 months ago

Yeah dear.You are right.I did not know about the mining site.Then 1 st I saw everywhere bitcoin mining.Then slowly I became familiar with this mining word!!!

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10 months ago

Yes, there are lots of scammers running as an mining sites, beware of them @Hiyamoni123

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10 months ago

Yeah dear. You are right that's why I don't deposit any amount in those of mining site,,,

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10 months ago

πŸ‘

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10 months ago

I thought mining is just invest wait and earn something like that πŸ˜…

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10 months ago

Nah, it's definitely not like that @Angel0124 πŸ˜‚

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10 months ago

Because before when iam starting knowing about bitcoin i saw different mining sites and thats what they telling to me πŸ˜…

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10 months ago

That's how they scam πŸ˜‚ first they ask you to deposit then they'll send back half or 1/3 ed of your deposit so you'll deposit more. If you deposit more you'll get some money back & if you won't then they just stop responding your mails n all

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10 months ago

Yeah too many scammers..ive been scammed almost 100$ before thats why i stop looking for mining sites and networking just free paying apps and sites πŸ˜„ then i share it to everyone when i already have my proofs so i can help them earn too ☺️

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10 months ago

These two were always confusing to me. Thanks for clearing.

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10 months ago