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Proof-of-Stake or PoS (proof of ownership) is a method of reaching consensus in which the probability of forming the next block in the blockchain is proportional to the share of tokens on the node account. When using this method, the block formation algorithm does not depend on the power of the equipment, but it is more likely that the block will be formed by the account with a larger current account balance.


For the first time, the idea of Proof-of-Stake was proposed at the BitcoinTalk forum in 2011, and the first implementation of the PoS protocol was presented in 2012 in the PeerCoin cryptocurrency.


The idea of Proof-of-Stake is to solve the Proof-of-Work problem associated with high energy costs. Instead of the computing power of the participants, the amount of cryptocurrency in their account matters.

Main advantages of PoS

A significant reduction in electricity consumption relative to the PoW method. To start a "double spending" attack, it is necessary to concentrate more than 50% of the total amount of the entire currency which requires huge monetary costs. If the attacker is still able to concentrate such an amount of funds, he will upset the balance by his actions and will suffer from his attack himself. Proof-of-Stake allows the use of game theory algorithms to effectively counteract centralization.

Main disadvantages of PoS

Motivation is in the concentration of funds, which can lead to the centralization of the network. If a small group is formed that concentrates large funds, it will be able to impose its own conditions for the functioning of the cryptocurrency, with which the majority of participants who do not control forging will disagree.

See also