Why Proof of Stake?
Proof of Work is a model in which miners use their computers’ processing power to verify transactions in the blockchain. They are then rewarded for the “blocks” of verified transactions they create. This creates a system in which miners with the most processing power are able to mine the most. You work, you get rewarded.
However, this means that outside influencers can come out of the blue and mine large amounts of currency, provided they have enough money to buy more processing power. It creates the potential for a “51% attack”, which refers to the fact that if an individual or group owns over half of the processing power of the blockchain, they can subvert it to their own ends.
Proof of Stake is a model that allows you to mine an amount of a currency, equivalent to the stake you hold in it. It rewards people who hold stakes in the currency, over those who do not. It also makes a 51% attack less likely, and less damaging if it were to occur.
The Proof of Stake system minimizes waste of processing power and harnesses it more efficiently. This shareholder-type method will reward those who hold onto the currency, which works great for balancing systems such as Ethereum, which will eventually tend towards inflation. This would make them a more stable currency and thus more appealing for adoption by the average consumer.
Do you think Ethereum's switch to Proof of Stake will be good for the currency? Let me know what you think about Proof of Work versus Proof of Stake in the comments below. As always, if you enjoyed this article, please upvote, follow, and resteem!
Spacecadet1
I like the proof of stake for the efficiency. When we have open abundance of energy creation that is held in the dark right now the proof of work will have a drastic reduction in overhead.
Cool article made me think about how the different systems can be tuned to best fit the application.
Yeah, I am very curious to see how the different existing systems will be altered and innovated in the future. People are only just starting to understand these concepts. Once they become well-known, there should be a crazy spike in blockchain innovation.
Definitely agree. Both in the eyes of regular consumers, and bigger institutions; Proof of Stake seems like the correct approach. This is why I keep warning fellow crypto-enthusiasts; everyone is approaching this as a game almost; however there are big differences between those models.
Yeah. For a deflationary currency, Proof of Stake could be disastrous, but it is very useful for currencies that increase in supply over time. I am glad that Proof of Work currencies exist, but Proof of Stake seems like it has much more potential for success.
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