PROOF OF STAKE (POS) AND ITS ADVANTAGES – ElgalCoin
✅ Staking means holding a certain amount of coins on a unique wallet that used for staking. The coins you deposit are locked for a certain period. By depositing these coins to that wallet, you guarantee that you will not approve fraudulent transactions. If you try to debase the system, you risk losing your coins. For approving transactions, you will get a staking reward, similar to mining reward.
✅ Proof Of Stake (PoS) is a type of consensus algorithm by which a Cryptocurrency Blockchain network aims to achieve distributed consensus. In PoS-based cryptocurrencies, the creator of the next block is chosen via various combinations of random selection and wealth or age (i.e., the stake). In contrast, the algorithm of Proof-of-Work-based cryptocurrencies such as Bitcoin uses mining; that is, the solving of computationally intensive puzzles to validate transactions and create new blocks.
✅ In general, staking is similar to mining, but you do not need mining equipment. Nevertheless, you just need a certain amount of coins that is proposed by the rules, and you can start staking. It is better for the environment since it doesn’t consume electricity as mining does. The primary benefit of staking coins is that it removes the need for purchasing expensive hardware.
✅ Incentives differ between the two systems of block generation. Under Proof Of Work, miners may potentially own none of the currency they are mining and thus seek only to maximize their own profits. It is unclear whether this disparity lowers or raises security risks. Under Proof Of Stake, however, those “guarding” the coins always own the coins, although several cryptocurrencies do allow or enforce the lending of staking power to other nodes.
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