We all must have heard about POS coins. It is the answer to the hardships creators faced with POW coins. Let us see in detail what exactly are POS coins. You can approach the blockchain development company to build your POS coin from the leader in the industry.
What are POS Coins?
We also are familiar with the term “ mining of cryptocoins”. It is the process by which the legitimacy of a cryptocurrency transaction is verified and double spending chances are eliminated from the system. Mining is done for Proof of Work coins. Proof of Stake (POS) is a kind of computer algorithm in which a person validates the block transactions by the virtue of the number of coins that are in his/her possession. This would in effect mean that the greater the number of coins owned by a person, the greater will be the mining power of the miner.
POS concept helped in eliminating the shortcomings associated with the Proof of Work concept. Unlike the POW, POS does not require the process of mining to validate a transaction. Mining involves solving complex mathematical equations which will result in the reward of the mined coin to the miner.
Know more on the Top ten Proof of stake coins that are in the crypto market today!
How do they differ from POW coins?
In order to initiate a transaction in POW algorithm, the data is first embedded into a block and then it is duplicated across all the nodes that a part of the network. These nodes act as the admin and validate each transaction happening in the block. In order to do so, the miners will have to solve complex computational equations and the first miner to solve the block gets rewarded with the mined coin.
The verified blocks later on become a part of the blockchain, which is a public transparent ledger. This is what happens in the Proof of Work. Mining for the coins in such a scenario with the normal PC that one would have at home is quite an impossible feat. It requires computers with insane hardware and software specifications, the power to run them, proper coolants among many other things.
Mining operations usually occur in educated environments like for example in mining farms. There are proper infrastructural facilities for the smooth management and operations of the computers in such mining farms. To state the obvious, the farms require huge amounts of operating costs which are mostly incurred by the miners.
Recommended read: Proof of Stake (POS) Coins – A Complete Guide
By saying about huge power costs, let me get you an analogy. A mining farm will consume almost the same power as the power consumed by two households, to mine just one bitcoin.This explains the high operational costs to a major extent. Off late , it has been observed that the miners are often selling the coins mined by them for cash so that they could manage the cost of operations of mining. This has proved even fatal for cryptocurrencies by creating a downward movement in the market.
Proof of Stake addresses this issue in a dignified manner by attributing the mining power to the proportion of coins held by a person. Thus, a POS miner is seen to be limited to mining transactions that are directly proportional to the stake of his ownership stake. Another potential risk of POW is that in the years to come, there will be very few miners left due to the unavailability of reward from mining.
Why POS coins?
As we saw earlier, POW based mining activities require a lot of energy and high-performance computers. Adopting POS can cut down this slack by bringing down the energy cost to considerable amounts. Hence, coins mined in this manner are way more energy efficient than coins that are based on Proof of Work algorithms. Moreover, in POW based mining, the miners don’t own the coins and look for maximizing their profits. Under POS, those guarding the coins will always be the owners of the coin.
Build your POS Coins from the master of the trade
Are you looking on how to create a proof of stake coin? Well, you are on the right track to establish your foothold in the cryptocurrency scenario. POS coins are certain to take over from the POW ones in the future.
Contact CryptoSoftwares today to build your custom POS Coins.
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