What is Proof of Stake - Explained in Detail (Animation)
Learn all about Proof of Stake in this animated masterclass that explains the concept in detail.
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00:00 Intro
00:13 What are Consensus Mechanisms?
Proof of Work and Proof of Stake are both “consensus mechanisms,” which are methods for maintaining the integrity of a blockchain.
Consensus is what solves the problem of "double-spending." If a cryptocurrency trader could spend coins more than once, the entire system would be jeopardized and susceptible to theft.
00:52 Proof of Stake
Proof of Stake is similar to Proof of Work: both are used to attain consensus and keep the underlying blockchain secure. But there is one important difference: Proof of Stake requires far less work to validate data blocks and thus requires less energy.
In Proof of Stake, there is no race amongst the nodes to validate a transaction.
Instead, they now take part in a “lucky draw” whose winner is decided by the blockchain itself. The winner then validates the transaction and gets a much smaller reward for having consumed much lesser electricity.
02:02 How Proof of Stake Consensus Works: The Details
The Proof Of Stake method selects a node to be the validator of the next block using a pseudo-random election process based on a combination of parameters such as staking age, randomization, and the node's wealth.
As the Proof of Stake name implies, nodes on a network stake a certain amount of cryptocurrency in order to become candidates for validating new blocks and earning the fee associated with them.
04:39 Security of Proof of Stake
The stake in Proof of Stake acts as a financial incentive for the forger node to avoid validating or initiating fraudulent transactions.
05:25 Features of Proof of Stake
-Fixed Number of Coins:
-Transaction Fees as rewards
-Impractical 51% attack
06:34 Advantages of Proof of Stake
-Energy-efficient
-Truly decentralized
07:15 Disadvantages of Proof of Stake
-Oligopoly with validators
-The Nothing at stake problem
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