Proof of Stake – The Past and its progress

Proof of Stake – The Past and its progress

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The duo suggested an alternate to adding blocks by energy dependent work of miners; the “Staking” method. In this technique a deterministic algorithm chooses nodes based on the number of coins a person had, this means stakers have more chance of getting rewarded if they “staked” more coins into their wallet.

Proof of Stake (PoS) – Challenges

Some of the issues faced in planning a Proof of Stake system are:

  • Expropriation. A person with substantial amount of coins can earn a bulk of impending coins
  • Distribution. How do you dispense preliminary coins as the block payments go to stakers?
  • 51%attack. Proof of Stake has to be cautious of staker who as 51% stake weight as Proof of work to be cautious of 51% miner attack
  • Nothing at Stake. A block is added when a node meets certain settings that includes stake weight. Now a hypothetical problem of Nothing at Stake (NoS) arises when 99% of all nodes sign both chains as no cost is involved to verify these transactions. This means a 1% staker could spend more by paying coins on one chain and looking for them on the other.

With these challenges faced, the Proof of Stake concept progress can be understood by each of the following coins. These coins attempt in solving the challenges faced by the PoS system.

Peercoin (PPC):

This is the first cryptocurrency that implements PoS, created by Sunny King in 2013; it addresses the issues faced by PoS in its own following ways:

  • Expropriation. Coin age is employed to stop coin rich stakers from ruling the rewards
  • Distribution. Reducing distribution, based on Proof of Work is used by Peer coin
  • 51%attack. PPC’s hybrid chain is completely secured by PoS. Therefore attacks are unlikely. Any such attack would diminish the coin and cost the attacker a great deal
  • Nothing at Stake. Optional checkpoints were implemented initially if the attack is successful. As the PPC network is now matured enough checkpoints are in the verge of fading out.

Blackcoin (BLK):

This is the later development in PoS progression. It’s considered a pure proof stake protocol without the need for any mining. This was first implemented by NXT in 2013. Blackcoin was released shortly after this phase, considered to be a modest and has a rational primary distribution stage

Created by Pavel Vasin and launched in 2014, it addresses the challenges of PoS in its own ways as mentioned below:

  • Expropriation. Addressed via fair circulation time.
  • Distribution. No premine for rational distribution
  • 51%attack. Extremely expensive to buy coins for attack, and also the coins would lose their value.
  • Nothing at Stake. Includes checkpoints for safety.

Ether (ETH):

The new iteration of PoS is Ethereum (ETH), launched mainly to move to an eco-friendly and distributed system. With 70% of total ETH in rotation, it aims at solving Expropriation by coin locking. It proves to be expensive for attackers. Validators will be punished for signing orphaned block chains.

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