From CryptoMarketsWiki
Revision as of 16:00, 7 July 2018 by JohnLothian (talk | contribs)
Jump to: navigation, search

Proof-of-stake is a consensus algorithm similar to proof-of-work. Unlike proof-of-work, a blockchain network that uses the proof-of-stake algorithm does not rely on mining to validate transactions and determine who gets to add a new block to the blockchain.[1] Instead, it assigns "validators" to create blocks based on how much of the network's cryptocurrency they hold in their possession. One example of this is the ethereum blockchain.[2] The idea is that the more of a network's cryptocurrency you have, the higher your stake in that system. The higher your stake, the more likely you are to be chosen by the system to create a new block. Another key difference is that, rather than "discovering" cryptocurrency tokens in a blockchain, all the tokens already exist - they are simply parsed out over time by the network.[3]