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Proof-of-stake is a method of securing a cryptocurrency network through requesting users to show ownership of a certain amount of currency. It is different from proof-of-work systems that run hashing algorithms to validate electronic transactions.[1] It is most commonly used as a supplement to proof-of-work in Peercoin[2] and a few other electronic currencies.

Usage in Peercoin[edit]

Peercoin's proof-of-stake system is based around the concept of "coin age", a number obtained from the product of the currency amount held times the amount of time it has been held for. When generating a proof-of-stake block, the user sends some money to themselves, consuming their coin age in exchange for a preset reward. This minting transaction becomes more likely to succeed over time until a valid block is found, generating a new block on the blockchain and a payout for the proving user.[2][3][4] This process secures the network and gradually produces new coins over time without consuming significant computational power.[5]

Both proof-of-work and proof-of-stake blocks are used in Peercoin, although the main blockchain is determined by the highest total consumed coin age (from proof-of-stake generation) instead of the total combined difficulty of the chain (determined by proof-of-work blocks, as in Bitcoin). Peercoin's developer claims that this makes a malicious attack on the network more difficult.[2][6]

The first 100% proof-of-stake system was NXT.

See also[edit]


  1. ^ Proof-of-Work vs Proof-of-Stake, 31-8-2014
  2. ^ a b c King, Sunny. "PPCoin: Peer-to-Peer Crypto-Currency with Proof-of-Stake". Retrieved 2014-16-15. 
  3. ^ Buterin, Vitalik. "What Proof of Stake Is And Why It Matters". Bitcoin Magazine. Retrieved 2013-11-20. 
  4. ^ Bradbury, Danny. "Third largest cryptocurrency peercoin moves into spotlight with Vault of Satoshi deal". CoinDesk. Retrieved 2013-11-20. 
  5. ^ Thompson, Jeffrey (15 December 2013). "The Rise of Bitcoins, Altcoins—Future of Digital Currency". The Epoch Times. Retrieved 29 December 2013. 
  6. ^ Whelan, Karl (2013-11-20). "So What's So Special About Bitcoin?". Forbes.