Proof of Stake

The Proof of Stake mechanism is a form of the so-called consensus mechanisms for achieving consensus in the network and jointly agreeing on an identical version of the blockchain.

The decisive factor is the stake of a user, i.e. the share of the total amount of tokens he owns. The larger the share, the more likely it is that this user will be selected to generate the next block. Roughly speaking, the Proof of Stake mechanism is more comparable to a stock corporation than Proof of Work – whoever owns a larger share in the company normally receives more voting rights that entitle him to make decisions.

One advantage of proof-of-stake over proof of work is that it does not “waste” energy. However, the consensus protocols used to prove compliance are often more complex and have their own unique weaknesses. A particularly difficult problem is to prevent “deep” reorganizations of the blockchain to duplicate previous transactions. As a proof of work, it is not possible to present a false “history” of transactions, because the calculation was used to create the chain. But with PoS, malicious miners can easily “simulate” a block chain that appears valid when in reality it is not. The most advanced proof-of-stake networks solve this by separating the chain into “epochs” and promoting honest behavior through the mechanism described above.