Proof of Stake (PoS): Reducing Wasteful Energy Consumption
Proof of Stake is a system used in altcoins—the latest generation of cryptocurrencies modeled after Bitcoin’s mechanism—where the proportion of block validation is determined based on the amount of coins held.
In Proof of Work (PoW), the system used by Bitcoin—the first cryptocurrency to emerge—voting power is granted based on the amount of CPU computation performed. This leads to miners competing to perform massive amounts of calculations as quickly as possible, resulting in the problem of enormous electricity consumption due to computer usage.
In contrast, Proof of Stake offers the advantage of reducing unnecessary power consumption. By curbing power consumption
, it helps stabilize the system by preventing surges in transaction fees and prices, prevents the centralization of mining operations and corporate control, and helps resolve the conflict of interests between Bitcoin users and miners.
Under Proof of Stake, miners can earn the same rate of return based on the amount of coins they hold, which prevents the centralization that occurs under Proof of Work.
