Proof of Stake
PoS has the same objectives as PoW to secure the network against attack and to allow consensus to occur in an open network. The first digital currency to use this method was Peercoin, and was followed by many others, such as NXT, Dash, PIVX, and so on. In PoW networks, solving the puzzle is what determines which node gets to create the next block in the chain. In PoS networks, blocks are said to be forged instead of mined, as they are in proof-of-work blockchains. In PoS chains, the validators get rewarded by getting paid the transaction fees for each block, and sometimes in additional coins created automatically each time a block is created. In PoS chains, the chance to be the creator of the next block is determined by the amount of investment a node has in the network.
Have a look at the following example:
There are five nodes in a PoS network. They have the following balances:
- 10,000 coins
- 200 coins
- 300 coins
- 4,000 coins
- 20,500 coins
The total number of tokens is 35,000 coins....
