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What is PoS (Proof of Stake)

Proof of Stake (PoS)

In proof of stake there is no mining. Instead one node will be chosen and simply process the transactions without needing to solve any complex math puzzle.  The other nodes will verify the block. In order to penalize any attempts at cheating the nodes must lock some of their currency in a virtual safe and this stake will be forfeited if any funny business is detected(This system is called Staking and can be thought of as similar to mining for PoW but without the large electricity bills). The more currency you stake the more likely it is you will be chosen to create the next block, therefore the more you have to lose if you try and cheat.

Pros:

  • Faster confirmation times
  • More transactions per second (Tx/s)

Cons:

  • There are still questions about the security of PoS and how Game Theory applies to the nodes

Cryptos that use PoS

  • Peercoin
  • NXT
  • Ethereum will move to PoS soon

TL;DR PoS takes your currency if you try and cheat the system

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