Cryptocurrency Mining: Proof of Stake (PoS)
Hello dear followers and fellow Steemians! In this post i'm going to cover Proof of Stake mining! I've already covered the basics of The Blockchain Technology and Proof of Work (PoW) Mining so feel free to read those too if you are looking for more basic information about blockchain tech and cryptocurrency mining!
I hope you enjoy the read and hopefully you tag along for more in the future :-D
Proof of Stake
The basic concept behind Proof of Stake (PoS) is very simple. A person can extract or validate transactions on the blockchain depending on how many coins he owns! (the benefits of holding folks!) This basically means that the more coins you have, the more power (or weight as it is usually called) you have on the network. Among the first few coins to adopt the proof of stake concept that you may have heard of are: Peercoin, Blackcoin, NXT and many others that soon followed their examples.
Proof of Stake was created as an alternative to proof of work, to try to limit the many problems PoW has, you can find some of those in my PoW post!
The rewards of a proof of stake coin are distributed when a block in that coin's chain is solved. The reward from the block gets distributed without the holders of the coin having to do much. Most of the proof of stake coins only request that you have your wallet open and synchronized to the blockchain to be able to reap the rewards from the mined blocks. The more coins you own, the more "weight" you will have on the network, meaning you get even more when a block is found.
The fundamental difference between PoW and PoS mining, is that PoW mining is more active and requires the miner to build a setup to mine the coin with atleast 1 GPU. Meanwhile, PoS mining is relatively passive, only requiring you to open your desktop wallet where you are storing your coins to provide your "weight" to the network and you'll be set. You don't need an amazing computer to do PoS Mining but you at least will need a bit of money to invest in the coin you are interested to generate enough weight to get significant rewards.
PoS Mining rewards can be very random at times depending on the current network weight, the more people that are staking a coin the less is the chance that you will be getting a reward, so some days you may get a lot of rewards because the whales of the coin stopped staking and some days you may receive next to nothing if there are whales with millions or billions of coins staking their shares.
Thanks for reading this far down! Hopefully you enjoyed the content, please help me improve by leaving a comment!
This was a rather short post, because really, there's not a lot to talk about when it comes to PoS Mining, because there's nothing really that complicated or interesting into it. The more you hold the more you get and in exchange the network uses a bit of your PC to power the network.
In my next article i will be covering a newer way of mining that is looking to solve all the ecological issues that come with PoW mining, so look forward to it!
If you enjoyed it please upvote, follow and resteem it so it can reach more of your friends! I'll be covering other crypto topics in the future!
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Hi Luna
Yay. I think I actually understood :D and I'm at the back of the class when it comes to things like this. How about including some diagrams (crayon) to help illustrate with the next tutorial?
My pooter isn't great but it's something I could consider in future. I like a bit of passive income.
cheers
Anj :)
Thanks for taking the time to read the post, I'm not that good at drawing (haha understatement of the year) but i will try to illustrate if i feel i could explain it better with a drawing, i had not even considered that!
Aw brill. Even squares and triangles or flow diagrams can sometimes help (me) to get it quicker.
Thanks for taking the time to decipher and translate it into plain English.
cheers :D
Anj x
Great idea, Anj! I also hadn't thought of this possibility. Even though I'm a painter....
Cool. Maybe you and @lunaticpandora could collaborate on a series to educate the non-tech masses. It'd be easy to read and beautiful.
cheers
Anj x
We usually write at different times u.u and my computer is getting slower by the day, so it's harder every time to use my painting software (and the phyiscal tools to do it are still a bit too expensive for my wallet). But I'll see what we can do. Maybe we can collab on some thingies. :)
Good job! Keep it up!
great post!!
I'm also at the back of the class throwing paper balls at @anjkara and laughing at the teacher which is you... of course :P
But we're homies, it's all good right? :D
I may end up sending you to detention if you don't behave! or worse I'll call your parents!
Waah, mining is too complicated for me. Great job on this article Luna^^
Thanks for reading my article Dawn <3
Aaaaa, great article! You helped me understand the way these things work so much more :) I had just tried to explain this to a friend and I failed because I realised I didn't really know some parts of how the system worked. However, you have now cleared all the fog in my head, so I'll make sure to get my friend to read your article!
<3 I love to have you around explaining so many interesting things. Thank you for existing.
I'm trying my best to explain it as simple as possible without diluting the meaning of the concept!
:) You're doing a great job with it! I'm really looking forward to more articles like these, but I know that you have them coming anyway so I won't bother requesting them. :)
yeah, the issue with proof of stake is that you need to have more to gain even more. that may not seat well with many people.
Yes, price of the coin can be a huge barrier of entry for those that did not manage to get a heavy bag in the early days of a PoS project.
Yeah, that's my issue with it. I'm so poooooor! If I try to do that, I'll paralyse my tiny funds in a wallet and I won't get its worth in return from staking. I'd rather put them in higher-reward investments for the moment.
Great job, I find this really interesting.
Nice work
This is a pretty nice summary! I get most of those things in theory but at some point I think I still want to learn details about how this gets carried out. Probably how the selection mechanism takes place. There seems to be some fun theoretical attacks for such systems too, like the "nothing at stake" problem that I still don't understand. For further reading, I suppose.