23 Nov Proof of stake (POS) cryptocurrencies
HODL your Proof-of-Stake (PoS) coins to validate, and earn crypto by PoS coins.The PoS concept is straightforward and easy for anyone with a laptop to do as opposed to buying the mining hardware you can find in your typical bitcoin mining farm.
PoS coins are also interesting because there is a growing trend in cryptocurrency market towards PoS coins. Even Bitcoin’s impending Lightning Network upgrade seems to forebode a PoS-like system, even though the main Bitcoin chain will continue to rely on PoW.
Proof-of-Stake is a much newer proposed methodology for achieving distributed consensus. The viability of network’s relying on PoS are not achieved by mining but rather by staking. Staking, simply put, is just when users hold their PoS-compatibile cryptocurrencies in a specialized staking wallet.
Staking achieves the same effect of mining (distributed consensus) without the need for expending exorbitant amounts of computing power and energy.
And if you “stake” your coins, you’ll be rewarded with crypto payouts on a rolling basis just as if you were a mining “winning” a block.
I was introduced to this concept by staking NEO (The Chosen One).
NEO is interersting because it uses something called a delegated Byzantine Fault Tolerance (dBFT). Disregard how confusing that might sound at first glance, and just think of dBFT as kind of like an optimized Proof-of-Stake system.
Like NEO, Lisk uses a different kind of PoS. Lisk’s distributed consensus methodology is called delegated Proof-of-Stake, or DPoS for short.
This means that while staking is possible with Lisk, it’s only possible for the top 101 “delegates,” with these delegates being voted on and agreed to on a rolling basis by the community.
So, not everyone can stake with Lisk. You’ll need to crack the top 101 delegates for that. But the project still uses an incredibly interesting PoS model.
As the Stratis team declared triumphantly at the time:
“This is the first documented and tested instance of a Proof-of-Stake blockchain block mined in C#. Now the developers will combine the full node with the wallet layer developed for Breeze, our full node with PoS will then be ready for a test release in approximately a week from now.”
PIVX is a project that forked off of the DASH blockchain last year and has, unlike DASH, fully transition to the PoS distributed consensus system.
PIVX holders have the perk of not having any minimum or maximum cap for staking, too, so you can stake any amount of coins you would like to. To this end, they take the opposite approach to Lisk: anyone and everyone can stake.
Stakers get an annual return of around ~4.8 percent with PIVX.
OKCash is an older cryptocurrency project, having been started back in 2014. They’re one of the “OGs” of PoS, as it were, and the project is orientated toward being a micro-transactions throughway.
They’ve got a pretty impressive annual staking return of around ~10 percent. That’s among the best annual returns you’ll find among any PoS coin right now.
All you’d need to do is move your requisite OKCash into a specialized staking wallet.
Many projects are already moving toward PoS, even though it’s a distributed consensus methodology that still hasn’t been widely tested at present.
If Ethereum’s shift to Proof-of-Stake goes off without a hitch and proves successful, the dynamic of PoS coins having a small overall sliver of the top 100 cryptocurrencies by market cap in contrast to PoW coins should forever change, to the extent that that “sliver” should become something larger.
ETH’s so-called “Casper” update is what will initiate the crypto’s evolution to PoS. Once this is completed, ETH holders will be able to stake their funds for recurring “dividends” of ether.
Right now, it’s definitely not set in stone how many ether will be required to stake. Indeed, there has been several numbers casually thrown around the community in recent weeks, but to be clear: nothing’s official yet.
Some of these numbers have been as high as needing 1,000 ETH to stake. Some projections are as low as 10 ETH. Another number you hear a lot is 32.
But don’t worry if you’re not an ether whale. Eventually you should be able to pitch in even small amounts of ether into staking pools to partake in the new model.