Proof of Stake (PoS) was first published in 2012 in a paper by Sunny King and Scott Nadal.
With the proof of Stake (PoS) algorithm, cryptocurrency is not created by solving mathematical tasks, as with proof of work, but by holding coins in your wallet.
The owner of the crypto currency uses the coins to validate the transactions on the Blockchain and thus participates in the security of the network. In return, you get a kind of interest, which is different for each crypto-currency and is usually around 2 and 10 % per year.
For example, if you hold 2% of a particular digital currency, you can validate 2% of all transactions. Crypto currencies using the Proof of Stake (PoS) protocol include Stratis, LINDA, Vsync, PivX and Reddcoin.
Advantages of using a staking pool...
The difference between Proof-of-Stake and Proof of Work is the validation of the transaction on the block chain. The blockchain is a decentralized database that is spread over a network. There is no central authority to confirm transactions. We need a consensus algorithm that is very difficult to manipulate. At the same time, these also ensure the necessary trust in the network.
Both protocols have advantages and disadvantages. The Proof-of-Work (PoW) protocol is attackable with the so-called 51% attack. If mining pools reach 51% or more of total mining power, the stability and security of the network can be compromised.
The Proof of Stake (PoS) protocol is much cheaper. Ethereum (cryptocurrency Ether) plans a partial conversion to the Proof of Stake algorithm.
With Proof of Stake (PoS) protocol, the participiants with a high amount of the cryptocurrency are preferred. This is where the Staking Pools come on the move. It is easier to keep $10,000 together in one crypto-currency, for example. With this you could validate ten times more blocks. Instead of each individual holding $1000 in a cryptocurrency
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