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Definition: proof-of-stake algorithm


A blockchain consensus mechanism that determines which miner can add transactions to the blockchain based on the amount of crypto the miner holds. The more crypto and the longer it is held, the greater the chance of adding the block.

There are several variations of the proof-of-stake (PoS) protocol, but none of them rely on using massive amounts of computer power and electricity as does the proof-of-work (PoW) method. The Ethereum blockchain, which started out as proof-of-work (PoW) is in the process of migrating to proof-of-stake (see Ethereum 2.0).

Mining Vs. Minting
When using a proof-of-work method, new coins are said to be "mined." However, in a proof-of-stake algorithm, new coins are "minted." In practice, the mining term is used in both cases. See proof-of-work algorithm and crypto minting.