PoS mining is a host-based earning option that processes encrypted information without using expensive hardware. This algorithm can relieve device monitoring concerns - investors need to:
1. Successfully select and purchase altcoins;
2. Install a local node and keep it running 24/7;
3. Do not withdraw assets from this address.
The PoS mining method has existed since 2011 and was first implemented in the PPCoin currency converted into PeerCoin. Initially, the technology is an auxiliary tool for the operation of the PoW system. The PoS algorithm became widely known after Vitalik Buterin became interested in it. The decline in traditional mining yields and long-term market stagnation has forced investors to pay more attention to this way of increasing capital. The concept was gradually expanded and refined, reaching the state of self-management today.
The PoS algorithm works based on the accumulation of a given type of currency. Cryptographic yield calculations are set by project developers, and some currencies use a hybrid method of operation, which includes the simultaneous integration of PoS and PoW algorithms. In many ways, the principle is similar to a deposit account, which charges interest in return for using banking services.
The advantage of pos mining algorithm is high security. The organizational structure makes it unprofitable to attack PoS systems. In some cases, criminals who want to attack currencies are among the victims as cryptocurrencies lose their stability and value. However, young projects with relatively little capital, regardless of protection algorithms, are at high risk. Taking control of a few trusted nodes of a young blockchain startup is no more difficult than renting computing equipment to conduct a 51% attack.
Additionally, virtual tokens are prone to inflation. The developers tried to solve this problem by setting a fixed transfer processing fee.
The acronym for PoS is interpreted as Proof of Ownership. That is, people with a certain amount on the balance sheet are allowed to participate in the creation of blocks. PoW is Proof of Work, where the network is maintained by the owners of computing devices. They probably won't put a dime in the account. And algorithms are constantly being compared because they are the foundation of the modern crypto market.
PoS has several clearly useful advantages:
1. The verification speed is improved.
2. Reduce the cost of organization protection function.
3. Reduced commission.
PoW, in turn, is highly resistant to various attacks. One downside of proof-of-stake mining is that there is some risk in forming a centralized system as all users are eager to aggregate the most assets in their hands for maximum revenue.
After entering the industrial mining equipment market, other cryptocurrencies cannot escape the control of financial groups. The way PoS mining works attracts both users and experts. The system looks more economically attractive and reasonable. At the same time, the PoW algorithm is better suited for large blocks. Vitalik Bouteflika has stated that he does not need miners, however, the idea of full proof-of-ownership is simply not achievable. So far, this approach has not been reliable enough, increasing the risk of the most expensive projects.
In summary, the explanation of POS mining and the introduction of the difference between pos and pow. Back in September, ethereum developers merged the two blockchain forks and announced that PoW mining of ETH on graphics cards and ASICs was no longer possible. However, after all, there was a fork, and the mining pool began to mine ETHW. However, this is a completely different currency. Big Ether has moved to POS and all Ethereum holders can increase their capital by activating staking.