1 Feb 2023

The Proof of Stake consensus mechanism was created due to some of the cons noticed in the Proof of Work consensus mechanism like the cost, and power it requires to run. The creation of this consensus mechanism was to make an alternative to the tedious ways of Proof of Work. I know deep down, some of you reading this think that Solana was the first to implement the Proof of Stake mechanism when in fact, it was Peercoin in 2012.
So how does Proof of Stake work? Here, transactions are not validated by miners but are validated by stakers. To keep the blockchain safe and free from attacks, validators are required to stake a minimum of a certain number of tokens so that attackers will also have to get a large amount of these tokens to be able to mount an attack. Let’s take Ethereum for example, to be a validator on the Ethereum blockchain, you need to lock up 32 ETH on the blockchain. So any attacker that tries to mount an attack on Eth or any eth-related platform will need to have staked 32 Eth and above for the attack to be successful.
Examples of Tokens that use the traditional Proof of Stake are;
EOS etc.
Over the years, due to how slow it became to validate transactions, Proof of Stake now has a variant called Delegated Proof of Stake (DPoS). Here, validators elect a certain number of validators that will validate a particular block of hashes or transactions. For example, on Binance Smart Chain, 15-21 validators are selected to carry out the validation of a certain transaction. The Binance Smart Chain (BSC) uses this particular variant in addition to Proof of Authority forming Proof of Staked Authority (PoSA).

Less expensive: Compared to Proof of Work, Proof of Stake is way less expensive, as the setup is not as bulky and tedious as that of Proof of Work.

Less computational power: Uses lesser amounts of energy compared with Proof of Work (about 1000% less), hence more eco-friendly.

Higher Scalability: Proof of Stakes provides blockchains with faster, smoother and more scalable transactions compared to Proof of Work.

Centralization: It is considered to be centralized by most due to the fact that only those who have enough (Whales) to buy and stake the required amount of tokens are considered to be validators.

Security: Proof of Stake traded security for scalability. With the way it is structured, its easy to complete an attack on any blockchain built on it. An attacker with 51% control of total stakes, can completely take over the network.

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