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Proof-of-Stake

There are several ways to confirm a transaction block as valid using the proof-of-stake consensus algorithm. One implementation is called “coin-age-based selection” (King & Nadal, 2014). Coin age is measured in blocks and is reset to one whenever a coin is sent or whenever a coin provides a signature (King & Nadal, 2014). Another implementation is “randomized block selection” (Pseudonymous, 2014). In the randomized block selection proof of stake, every contributor deposits an amount of money into an escrow wallet in order to be eligible to “vote” on the validation of a new block of transactions. The contributors should always vote for a valid block or they will lose their money due to users losing confidence in the system if transactions are not properly validating, which will decrease the value of the cryptocurrency coins held by each contributor.

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Written by

Stefan Thume

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