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Proof of Stake (PoS) Meaning

Proof of Stake (PoS) is a Consensus Mechanism where Validators are Chosen to Create New Blocks and Verify Transactions based on the Number of Coins they Stake (lock up) as Collateral. Unlike Proof of Work, which uses Electricity, PoS uses Capital to Secure the network. If a Validator acts Maliciously (e.g., trying to Double-spend), the Network Slashes their Stake, causing them to Lose Money.The Main Advantage of PoS is Sustainability.

Ethereum’s Move from PoW to PoS (known as The Merge) Reduced its Energy Consumption by 99.9%. This makes PoS ESG-Friendly and Scalable for Global Use. Furthermore, PoS allows for Staking Rewards, where Regular Holders can Delegate their coins to a Validator and earn a Yield (like Digital Interest), making it a Popular Choice for Passive Income.Technically, PoS uses a Randomized Selection Process.

The More Coins you stake, the Higher your Odds of being Selected. To Attack the network, a Hacker would need to Buy and Stake 51% of the Total Supply, which would Drive the Price Up so high that the Attack would Cost Billions of Dollars.

This is called Economic Security. Even if they Succeeded, the Value of the Coins they Staked would Crash, making the Attack Irrational.Critics of PoS argue that it leads to Centralization, as the Rich get Richer and have More Influence over the Governance.

They also argue that it is More Complex and Less Battle-tested than Bitcoin’s Proof of Work. However, PoS has become the Industry Standard for Modern Blockchains (like Cardano, Solana, and Polkadot) because it provides the Speed and Efficiency needed for Consumer-facing Applications and DeFi.

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