What is proof of stake?

Did you know that Bitcoin uses more energy than the entirety of the Philippines?

Pretty unbelievable right?

What if I told you there was an alternative method, that could significantly reduce how much energy cryptocurrencies use?

Then let me introduce to you, Proof of Stake.

So what is Proof of Stake?

Proof of Stake is known as a consensus protocol.  It’s used to secure a blockchain, verify transactions and add new blocks of transactions to the network.

Proof of stake relies on nodes, which are basically computers, locking a set number of a blockchain's native coins for a certain length of time.

They do this in order to win the right to validate transactions - as with each validation, they get a reward.

The higher the number of staked coins, the higher the chance of becoming a network validator.

But what if the selected validators choose to perform fraudulent transactions?

How does Proof of Stake Prevent Fraud?

Well, proof of stake blockchains relies on a technique known as Slashing, which involves deducting tokens that are staked by any validators found taking part in fraudulent transactions.

Slashing basically makes it way too expensive to commit fraud, as nodes would need to be holding more coins than the fraudulent payout, making it a total waste of time.

So, Proof of stake offers multiple benefits, including increased security and better energy efficiency.

The most popular Proof of stake blockchains currently includes Cardano, Polygon, and Ethereum.

Now, you’re probably wondering “How are validators chosen?”

Proof of stake blockchains actually uses various methods to select validator nodes.

Every proof of stake system aims for decentralization and is designed to ensure everyone gets a fair chance at becoming a validator.

There are two common ways for selecting validators in Proof of stake systems.

Randomized Block Selection

In this method, validators are randomly selected from nodes with the highest stakes and lowest hash values.

This method allows other nodes to confirm upcoming validators since all stake sizes are visible on the network.

Coin Age Selection

This favors nodes that stake tokens for longer amounts of time on its network. It is calculated by multiplying the number of staked coins by the number of days staked.

In the coin age selection method, nodes that have recently been chosen as validators have their coinage reset to zero. This way, the network can prevent nodes with large stakes from dominating the blockchain.

What are the advantages of proof of stake?

There are a number of advantages to this system.


Proof of stake consensus protocol is not only cheaper, but it can also be easily changed to suit a blockchain's needs. The most common variations you’ll hear about include:

Delegated Proof of stake

Nominated Proof of stake

Proof of staked authority

Each of these variations has benefits and drawbacks, but they are all viable options for blockchains since they are pretty inexpensive to implement.


Scalability refers to the ability of a network to expand and grow.

Proof of stake is one of the most scalable consensus protocols available in blockchains because it doesn't depend so much on physical hardware. It’s much easier to expand the size of Proof of stake blockchains because nodes only need to have enough tokens to go around.

This is really different to Proof of Work blockchains which need heavy-duty computers to mine new blocks of transactions. This scalability problem is one of the main reasons proof of stake blockchains were invented ini the first place, and they are significant speed advantages as a result.

Bitcoin, the largest PoW network, can only process seven transactions per second, while Cardano and Polygon (both proof of stake blockchains) can handle 250 and 1000 transactions per second, respectively - a huge difference!

Energy efficiency

Recall, Proof of stake blockchains use significantly less energy than Proof of work blockchains such as Bitcoin. This makes them more accessible to individuals who want to create hardware nodes and part of a network.

This in turn should also allow blockchain adoption to grow more easily as it moves into the future.


Proof of stake improves security by using slashing to incentivize good behavior from validators.

If a validator engages in fraudulent transactions, they lose a part of their stake and their rights to engage in transaction verification. Nobody’s interested in losing money - so this is a big security plus for the approach.

Moving on, let’s look at the disadvantages of proof of stake

Unfortunately, there are a few downsides.

Coin accessibility

Staking like this always requires holding a native token of the blockchain and these tokens can usually be obtained from an exchange or in presales.

However, sometimes users need a significant amount of money just to get started on staking.

For instance, Ethereum staking requires a minimum of 32 ETH which is not exactly accessible to everyone.

The 51% attack

A 51% attack is a situation where more than half of a network's nodes come under the control of bad actors.

In their early stages, proof of stake blockchains are pretty vulnerable to 51% attacks because some circumstances make it easier for a few individuals to buy up and own most of a network's coins.

For example, a market crash could severely drop the value of a proof of stake cryptocurrency, exposing it to potential buyout risks and the possibility of a 51% attack.


Proof of Stake is still a relatively new consensus mechanism, and it took Ethereum several years to switch to this kind of protocol.

It basically involves having nodes (which are computers) stake tokens to win the right to verify transactions.

Validators that take part in fraud have their share of stakes deducted in a process known as Slashing. Slashing increases the financial risk of fraudulent behavior and offers a security boost.

Proof of stake promises several solutions to the issues faced by today's blockchains - issues like decentralization, network security, and energy consumption.

As it currently stands, Proof of Stake has already been proven to consume far less energy than Proof of Work blockchains.

As for security and decentralization issues, there’s still some work to be done before Proof of Stake replaces the Proof of Work consensus protocol.

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