B.I.S.S Research White Papers

Proof of Stake Explained Simply

Robert Morel

Robert Morel

Robert Morel is a Full Stack Software Developer. Specializing in legacy applications. I have a particular interest in server management, operations and provisioning of deployment pipelines.
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Proof of Stake means that an individual who wishes to mine or validate a transaction on the blockchain can do so depending on how many blocks they already hold. As the name partially implies, the greater the number of blocks or ‘stake’ that the miner has in the blockchain, the larger the mining power they are given on the blockchain.

To understand the importance of Proof of Stake, it is important to understand how mining works and how it has worked in the past.

Proportional distribution of mining power

Mining, as many know, requires a great deal of computing power as the miners are required to solve a computerized puzzle in order to receive rewards and the miner to solve the puzzle is rewarded with a certain amount of cryptocurrency.

The issue with this is that it is very energy-intensive and many miners began selling off their rewarded coins to offset bills. This is where Proof of Stake came in as it helps to even out the mining power across various miners based on their ownership in the block. For example, if a miner holds a certain percentage of bitcoin, they are only allowed to mine a certain amount of blocks and this means that there is a more proportional distribution of mining power.

Security by Distribution

The Proof of Stake method also prevents 51% attacks which occur when a miner holds over 51% of the computing power on the network. This means that they are able to invalidate transactions of other miners or create fraudulent block transactions for themselves.

By using the Proof of Stake system, a miner is far less likely to want to compromise a blockchain in which they hold a significant stake in and this helps to prevent attacks overall.

Robert Morel

Robert Morel

Robert Morel is a Full Stack Software Developer. Specializing in legacy applications. I have a particular interest in server management, operations and provisioning of deployment pipelines.
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