What is Proof-of-Stake?

The proof-of-stake mechanism is a form of so-called consensus mechanisms to achieve consensus in the network and to jointly agree 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 possesses. The larger the share, the more likely it is that this user will be selected to mine the next block. Roughly speaking, compared to proof-of-work, the proof-of-stake mechanism can be compared to a public limited company – those who own a larger stake in the company normally receive more voting rights that entitle them to make decisions.

An important difference, however, is that a random algorithm is used in the proof-of-stake mechanism for building consensus in a blockchain network. He draws a participant who then has the right to mine the block. Simply put, each token is a winning ticket – so users with a higher stake (= more winning tickets) are more likely to be selected. More precisely, proof-of-stake mining is called forging.

What is the difference between proof-of-work and proof-of-stake?

proof of work
The proportion of computing capacity in the entire miner network is decisive for the probability of successfully mining a block.

The proportion of tokens in the entire miner network is decisive for the probability of successfully mining a block.

To mine a block, it is usually a question of using hash functions to find a certain value. Since the hash functions are not reversible, you cannot simply calculate which X you have to use in the function to get the desired Y. Instead, the miners solve the problem by trying out many values. Although there are different types of these calculations, the following analogy can be used in a simplified form:

“Find a hash value that matches the given properties”

The stricter the desired properties are, the more difficult it becomes to find a value that meets all these requirements. With proof-of-stake, however, we influence the difficulty with a user’s stake, among other things – the larger the stake, the lower the demands on the result. This makes it easier for users with higher stakes to hit results with these properties.

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