What is Proof of Stake?

A consensus mechanism is used to verify and secure cryptocurrency transactions. Proof of Stake( PoS) is one of the top cryptocurrency consensus mechanisms.

Proof of stake helps in selecting the blockchain participants to verify the transaction in the blockchain. People who verify the transaction using PoS are called validators.

Token holders must deposit (which is called “stake”) a specified amount of crypto to participate in the validation mechanism.

Validators are selected randomly. The chances of selection increase with the number of tokens held in the wallet. The one who accurately verifies will get rewarded.

Proof of Stake needs less computational power and is more energy efficient than other consensus mechanisms. It allows more people to participate in the blockchain. However, incorrect validation will lead to a penalty.

Popular cryptocurrencies that use Proof of Stake (PoS) are Solana, Cardano & Terra.

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