Proof-of-stake is a consensus technique for processing transactions and producing new blocks on a blockchain. A consensus mechanism is a way for evaluating database entries and securing a distributed database. In the case of cryptocurrencies, the database is referred to as a blockchain; hence, the consensus process protects the blockchain.

UNDERSTANDING PROOF-OF-STAKE (POS)

Proof-of-stake decreases the computing effort required to validate blocks and transactions. Under proof-of-work, it safeguarded blockchain. Proof-of-stake modifies the way blocks are validated using the machines of currency owners, so less computing labor is required. The owners stake their currencies in exchange for the opportunity to validate blocks and become validators.

HOW IS PROOF-OF-STAKE DIFFERENT FROM PROOF-OF-WORK?

Both consensus processes assist blockchains in synchronizing data, validating data, and processing transactions. Each technique has proved effective in maintaining a blockchain, while each has advantages and disadvantages. However, the methodologies of the two algorithms are significantly different.

GOALS OF PROOF-OF-STAKE

Proof-of-stake is intended to alleviate network congestion and environmental sustainability issues associated with the proof-of-work (PoW) protocol. Proof-of-work is a competitive method for confirming transactions, which drives people to seek out advantages, especially when monetary value is involved.

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