Proof-of-Stake is a consensus mechanism that consumes less energy than Proof-of-Work.

The Bitcoin network uses a so-called proof-of-work (PoW) consensus mechanism. Transactions are collected in blocks and then linked together in the blockchain. This involves competition among miners to solve a puzzle in the form of a math problem. The miner who solves this puzzle first gets to add the block to the blockchain and in return receives a reward in the form of Bitcoin. The difficult puzzles keep the network safe, but at the same time it takes a lot of energy.

As a solution, Proof-of-Stake has been devised. The main difference is that network participants can hold their "stake" (tokens). At certain intervals, the protocol assigns a participant (validator) to validate a block. Thus, participants who create new blocks are not chosen based on their computing power as in PoW (proof-of-work), but participants are chosen based on the amount of coins they stake.


Rules for striking

There are conditions associated with discontinuing a cryptocurrency. For example, there is a minimum period during which a validator cannot withdraw his coins. Also, some cryptocurrencies have a minimum amount that must be staked to become a validator. With Ethereum, for example, this is 32 ETH.

Not everyone has 32 ETH available to become a validator. Strike pools have been devised as a solution to this. Multiple people put in money to reach the minimum amount together. The rewards are then shared. Often a percentage is also retained by the owner of the strike pool


One concern with a Proof-of-Work blockchain is a 51% attack. This means that an attacker has more than half of the computing power available giving him control of the blockchain. This allows an attacker to duplicate transactions, for example. With a Proof-of-Stake blockchain, this danger is less present. In fact, in order to carry out a 51% attack with PoS, the attacker must have 51% of the strike coins, this 51% is then set aside in a strike pool. If an attack is then performed, the honest nodes can vote against the modification. The attacker then loses all his money.