Why is Proof-of-Stake consensus key to the crypto ecosystem?

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Highlights

  • Proof-of-Stake system differs from Proof-of-Work (PoW), which uses high-end computers to solve complex algorithms
  • Proof-of-Stake uses tokens as the unit of account.
  • Under Proof-of-Stake, every validator has the equal opportunity to stake tokens and earn rewards 

Proof-of-Stake (PoS) is a consensus mechanism for validating transactions and creating new blocks in blockchain technology. The validators are required to stake the token to validate a transaction. This is done to build a consensus among all the nodes in the network. Proof-of-Stake uses tokens as the unit of account. For instance, ETH will be the native token in the case of Ethereum.

Proof-of-Stake system differs from Proof-of-Work (PoW), which uses high-end computers to solve complex algorithms for validating transactions.

Experts and beginners in the sector reportedly prefer this accessible algorithm. An apparent reason for the preference for Proof-of-Stake is the opportunity to earn passive income in staking. Furthermore, better variations and constant inventions in the system promise more efficient experiences.



 


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