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Redirected from: proof-of-stake consensus

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 more "staked"), 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.

Delegated Proof-Of-Stake (DPoS)
Delegated PoS is a variation of PoS that is considered to be more democratic. Rather than being the miner that adds the block based on the total amount of crypto at stake, crypto holders use their stake to vote for other miners, which are known as "witnesses," "super representatives" or "validators." The delegates do the mining and are rewarded with newly created crypto plus transaction fees until they are voted out and new delegates are voted in. See proof-of-work algorithm and crypto minting.