One of the most important things, when buying cryptocurrencies and working with them, is the security issue. Users want to be sure that their funds are well supported and that they will not be victims of attacks that cause them substantial losses, that’s why the blockchain network has its different methods to give this type of guarantees.
In the previous article titled PoW: Proof of Work, how do it work? We already mentioned one of these existing methods in the blockchain to try to guarantee the security of the network that consists of a consensus algorithm that is used to confirm the transactions and to be able to add blocks in the chain of the network, guaranteeing in a better way the security of the same.
How do PoS work?
In this same order of ideas of the efforts to seek the invulnerability of the network, this Protocol of Distributed Consensus is created that ensures that the people who have the highest verified amount of blocks or cryptocurrencies within that network will have the possibility of finding more the difficulty of the calculations that have to be done to find or undermine a new block will decrease to the extent that the user owns more verified cryptocurrencies.
This method is completely different from that of work tests since it is based on the principle that those who own more units of a cryptocurrency are the most interested in guaranteeing the safety and survival of the same, which is why they are helped to simplify the way to obtain them.
People who want to participate in these participation tests have to show that they have a certain amount of coins, for them they must put the ones they have in their wallet in Stake mode and the more coins they have in that mode, the easier it will be to win new ones. This was originated by the complex thing that the mining had become during a period in which the prices fired
Benefits and disadvantages of participation tests
The main benefits of the participation tests are that they do not require very advanced computer equipment to be able to mine, since the finding of new cryptocurrencies is based on the possession of the users and, in turn, on their scarcity in the network. There is also no pressure on the price of the currency since it is the users themselves who safeguard and guarantee it and in this sense, 51% attacks are also reduced (at least until now, none have been known under this protocol).
For its part, the main disadvantages of this protocol are that the essence of the main use of the cryptocurrency is lost as a means of payment and becomes counterproductive because in the end only the currencies that are already in the hands of the users of the network can be mined. Another thing is that with this method the equity of the distribution of the cryptocurrencies becomes null, because who has more is the one who has more possibilities of having more, also giving them greater decision power over the network and converting them into species of centralized “authorities”, which breaks with the principle of decentralization of cryptocurrencies.
There are two main strategies for proof of stakes: pure participation tests and deposit tests. Previously participation tests were known as coin-day tests that were a unit that indicated the number of coins that the user had and the number of days that had them in Stake status to be mined, were then known as coinages.
This is how in the beginning they talked about the difficulty of mining based on the number of coinages or cryptocurrencies that users were willing to spend. The transactions that were carried out were known as coin stakes and finally, they went through a labor test, only that the difficulty diminished if they had a greater number of coinages.
Pure proof of stake
In this test, we proceed in a similar way to what the coin-day test was, only that in this case the age or number of days that are in stake in the user’s wallet are not taken into account. In this approach coin-age is not spent, so that the one with more coins will have more possibilities of getting more, leaving beginners relegated to the process of mining and participation of the blockchain.
Proof of deposit
When users who own cryptocurrencies want to mine new blocks and make their currencies available, they are frozen until a certain number of blocks is confirmed. Put simply, this type of test rewards those who are willing to leave their coins immobile for longer.
What do you think about this topic? Did you know how the participation tests work?
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