Proof of stake is a consensus algorithm originally invented by Sunny King and Scott Nadal in 2012. The idea for proof-of-stake (PoS) began as a way to create an alternative to Bitcoin’s proof-of-work algorithm, which requires miners to solve cryptographic puzzles to verify transactions on the blockchain. PoS was supposed to be an energy-efficient method of accomplishing the same thing. In the same year, Peercoin became the first cryptocurrency to adopt proof-of-stake as its main consensus algorithm when it switched from Bitcoin’s SHA256 hash function used in POW algorithms (e.g., Bitcoin) and instead used a hybrid solution called Secure Hash Algorithm 256v1 with chained hashing (SHA-256c). Proof of stake is a consensus algorithm that relies on coin age and weight to achieve consensus. Coin age is the total amount of time that the coins have been held by one or more owners, while coin weight is calculated by multiplying the number of coins by their value. For example, if you had 100 EOS tokens with a price of $1 each (100 x $1 = $100) and it was your only cryptocurrency asset, then your entire portfolio would have a coin weight of $100.Although proof-of-work systems rely on computing power to reach consensus and validate transactions, proof-of-stake systems rely exclusively on ownership information, making them inherently energy efficient.
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