What is Proof of Stake?

Proof Of Stake Cryptocurrencies

Proof of Stake (POS) alternative to the Proof Of Work (POW) algorithm, that serves the purpose of keeping the security of the blockchain intact and precisely to avoid some of the potential future pitfalls that could occur with any cryptocurrency such as The Tragedy Of The Commons.

Proof of stake is also considered an eco-friendly alternative to POW because the mining takes place usually, in simple crypto wallets by just holding the cryptocurrency for a certain amount of time.

So in POS instead of calculating complex hashing solutions, with an ever-rising complexity - difficulty due to new and better mining equipment introduced into the networks daily, the coins are minted as an interest rate in proportion of the coins that the owner holds in a wallet.

Proof of stake also means that, only people holding the currency earning it by verifying that they own it.

So ultimately proof of stake requires less computational work as minting a new block depends on the stake the user has.

Proof Of Stake comes with its pitfalls and problems

A classic problem usually discussed is the blockchain forking. When a fork occurs in a POS cryptocurrency, minters/holders/miners have an incentive to mine/mint on both branches of said currency introducing security problems for possibly both forks.