The Proof of Stakes (PoS), is considered as a different system than the one used with the first of the Cryptocurrencies and so far the best known of them, as is Bitcoin and its use is to validate electronic transactions, which uses the proof of work system. It is a proof of participation algorithm, commonly known as PoS, which means Proof of Stake, it is a distributed consensus protocol for networks that ensures a cryptocurrency network through the request for proof of owning such currencies.

With these PoS tests, the probability of finding a block of transactions and obtaining the corresponding reward is directly proportional to the amount of coins that one has accumulated, in this way it is avoided that the trust is given by the amount of work invested. The first decentralized digital cryptocurrency that implemented the PoS, was Peercoin and then Vitalik Buterin that improved and made this concept popular. In the previous article entitled What are PoS or proof of stakes? It describes the operation of these tests, their benefits, disadvantages and some strategies implemented in them. PoS Proof of stakes work economically encouraging its users to participate, and it differs from work tests, in which actors can be penalized if they act maliciously or with bad intentions. Here are some advantages of the PoS Proof of Stakes.

Advantages of the PoS

The ecological advantage is considered to be the main advantage, which means that there is no need to consume huge amounts of electricity to secure the Blockchain, but this is not the only one. In view of the low energy consumption, there is no need to strongly compensate network users for creating new tokens.

The risks of centralization are reduced because the reward is proportional to the amount of assets in deposit in each custody. It means that each user can buy the equipment they need based on their work. Participation tests admit to finding better mechanisms than the same work test, to discourage the formation of decentralized posters, that is the formation of posters or actors that want to damage or harm the network.

In a consensus test participation algorithm, the staker can transfer, buy or sell his collateral at the moment. That is, you do not need a powerful hardware or an optimal software, much less a complicated electrical installation. A cryptocurrency with PoS algorithm, the profitability obtained by the stakers is not necessarily linked to the value of the cryptocurrency of the market, but the profitability is a fixed percentage, therefore, there is no connection between adoption and security.

In a PoS algorithm, a staker has the need to acquire tokens in order to validate blocks, this puts upward pressure looking for sellers, and having no costs to cover, does not seek to sell to have to pay. With PoS it is not necessary to have powerful computer equipment, the costs are reduced and there is no pressure on the price. Likewise, there is no known case in which there has been a 51% attack on a PoS system. It is based on the assumption that whoever owns the most coins has a greater interest in the survival and proper functioning of the network.

Let’s look at some disadvantages PoS

In a PoS algorithm, users make a competition to see who has more collateral, however, in this process it does not require hardly any energy, only the one necessary to keep a processor on and always be connected to the internet. In a PoS algorithm, users have the same incentive, regardless of the investment they have made. The profitability obtained based on the money invested is linear. The investments made in PoS are opposite. A staker acquires his Cryptocurrency and his expenses arrive there. What results in a positive cashflow.

The fact of keeping the coins in your possession, also indicates that you cannot trade with them, so that a part of such currency is no longer useful as a form of payment, by earning a higher premium depending on the amount, that is to say, those who have more gain and in the event of a hypothetical attack of 51%, this would be more difficult to counter. In conclusion, with PoS you must save all the currencies in order to obtain more profits.

What do you think about this topic? Did you know the advantages and disadvantages of PoS?

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