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Proof of Stake (PoS)


Proof of Stake (PoS) is a class of consensus mechanism that is used in a blockchain to confirm and verify transactions to avoid counting the same transaction twice (the double-counting issue).

Understanding the term

In a centralized system, double-counting does not create an issue because it is easy to spot. However, the situation can be somewhat complicated on a decentralized blockchain, which cryptocurrencies such as Bitcoin and Ethereum rely on. Though both Proof of Work (PoW) and PoS are known to prevent double-counting issues, the latter is more energy-efficient than the former.

Double-counting is an error caused by a communication gap between different nodes of a blockchain. PoS is preferred over PoW as it offers more security against cyberattacks by employing validators and utilizing staked coins instead of relying on miners equipped with heavy machinery for minting new blocks.

The main use of proof of stake is to handle incentivized tasks where participants are due a reward for properly validating new data without running into double-spending issues or faking a transaction. Participants in a proof of stake mechanism are known as “validators” since their goal is to validate new transactions to earn rewards.


PoS originated as an improved alternate mechanism for PoW that powers Bitcoin transactions. The PoS definition clarifies, beyond any doubt, that it effectively solves double-counting problems.

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