What are Proof of Stake coins? The Ultimate Guide
Read this article to know all about Proof of Stake Coins. Know how it is different from Proof of Work method, how can you mine these type of coins, which such coins are currently available and everything else about this topic.
Proof of stake (POS) is a concept which is an alternative to the Proof of Work method. In this style of trading, a person can mine or carry out block transactions depending on how many coins they hold.
What does this mean? It means the more bitcoins or crypto a person has the more coins he can mine. The owners stake their coins, and these coins are then used to validate the blockchain and also to create new blocks. Users have to put their coins in a wallet. This wallet has a connection to the blockchain. Earlier these wallets needed to be always connected to the blockchain but now there are some sites which allow the users to store coins in cold storage.
When Proof of work was the only method, the users spent a lot of time and energy in mining the coins. One could verify or validate by solving computing puzzles which were proof of work. This process needs a lot of computing power to run different cryptographic calculations. This uses a lot of electricity to complete the process. The Proof of Stake can bypass this problem by using a different method. This method attributes mining power to a user depending on the number of coins held.Benefits of Proof of Stake
Proof of Stake is becoming a lot more common and according to Crypto Head there has been a huge increase in Australian users who are utilising the technology in the last year. There are many advantages of Proof of Stake style of mining for cryptocurrencies. Let us take a look at some of these advantages.
Less Consumption of Energy: a lot of energy is a must to mine for cryptos. The computer and mining machines operate continuously without stopping for a long time. There is specific computing hardware which does the job well but is a drain on the energy resources. Proof of Stake is more energy efficient when compared to Proof of Work.
Cheaper Hardware: instead of spending a lot of money on buying expensive equipment, you can use your computer or even mine via wallets provided by some companies. This makes coin mining more reasonably priced process.
51% Attack: the fear that someone with more than 50% of cryptocurrencies on a blockchain will be able to control the whole process is very remote in Proof of Stake method.How To Get Started With Proof of Stake
First, you will have to decide on which coin to stake. There are many Proof of Stake currencies available. You should do thorough research and find out all the terms offered. Find the coin which has been performing well and has solid backing in the form of users. Excellent reputation and reviews will also help you to zero in on the right coin.
Once you have selected the coin you want to stake, then you need to find out what the requirements are. Every coin and every website will have its own set of requirements. There is usually a minimum amount which you should have to stake. Go through the instructions carefully.
Traditionally for Proof of Stake mining, you had to connect to a wallet and remain connected throughout. If you have a spare computer lying around, then it is excellent for staking. You can even invest in buying a specialized computing device to stake. If you don't have a spare computer, then you can use a Virtual Private Server or VPS. This will allow you to set up a wallet on the private server and keep it running 24 hours a day. This will also save you money on electricity bills.
If not all then some companies make it very easy for you to stake coins. All you have to do is hold your cryptocurrencies in a dedicated wallet. That is the only requirement for staking.
This is a comparatively new feature. This allows the user to keep his cryptocurrencies in an offline wallet. You can stake while your coin wallet is offline. There is no need to keep a computer or VPS running throughout the day. Essential Points to Keep in Mind before Staking Crypto
After going through the information given here, you can decide in an informed way. You can take advantage of the Proof of Stake system if you understand it well.
