Cryptocurrency uses Blockchain to carry out transactions. Blockchain technology is decentralized, meaning its control is not under third-party control. To make transactions possible using cryptocurrency, the users must agree that the transaction is valid.
There are two major ways to reach a consensus: Proof-of-Work (POW) and Proof-of-Stake (POS) consensus.
What is a Proof-of-Stake Based cryptocurrency?
Proof-of-Stake is a set of agreement or consensus mechanisms utilized to validate cryptocurrency transactions. It allows specific users (validators) to stake their coin in exchange for validating a transaction and adding it to the Blockchain. The validators must be truthful about the validation process because any inaccuracy or untruthfulness will lead to the loss of some of their staked coins. But on the other hand, if the transaction goes through, the validators are rewarded with some cryptocurrency. It is good to know that the first cryptocurrency to use the POS consensus was Peercoin.
Top Proof-of-Stake (POS) cryptocurrencies
Cardano is the first POS coin in terms of market capitalization, which stands at $28.8 billion at the time of writing. It uses Ouroboros Blockchain to enable smart contracts and peer-to-peer transactions.
Solana is the world’s fastest cryptocurrency, with about 65,000 transactions per second. In addition, it has a very low transaction fee.
Solana is smart contracts plus NFT compatible with a current market capitalization of $27.3 billion.
Casper is the first blockchain that allows enterprises and developers to build blockchain-enabled services. In addition, it enables upgradeable smart contracts eliminating the need for costly migration.
Other popular POS-based coins are:
- Vega protocol
- LTO network
In conclusion, POS cryptocurrencies are an alternative to POW. Its major advantage is that it doesn’t consume energy like POW consensus. Recently, Ethereum has been processing to leave the POW consensus for POS consensus.