Like we explored in another blog, a public blockchain functions through consensus mechanisms: the process for validating transactions without a third party like a bank.
PoW and PoS are two such mechanisms. While their goal—to reach a consensus that a transaction is valid—remains the same, how they get there is a little different.
Consensus mechanisms were created to solve these problems; the most popular being PoS. We have already learnt about PoW; not let’s get to know this one and how it’s different from PoW.
What Is PoS?
PoS still uses cryptographic algorithms for validation, but transactions get validated by a chosen validator based on how many coins they hold, also known as their stake.
Individuals aren’t technically mining, and there’s no block reward. Instead, blocks are ‘forged.’ Those participating in this process lock a specific number of coins on the network.
The bigger a person’s stake, the more mining power they have—and the higher the chances they’ll be selected as the validator for the next block.
To ensure those with the most coins aren’t always selected, other selection methods are used. These include randomized block selection and coin age selection (forgers are selected based on how long they’ve held their coins)
The results are faster transaction times and lower costs. The NEO and Dash cryptocurrencies, for example, can send and receive transactions in seconds.
For instance, Ethereum migrated from PoW to PoS in 2022 because it is more secure, less energy-intensive, and better for implementing new scaling solutions compared to the older PoW mechanism.
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