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After reading Crypto Income Guide people ask about PoS coins which were not shared in the ebook at all, since that needs some tech skills. Here is a nice write up on how to use Proof of Stake and Masternode blockchains.
“Proof of Stake has a bright future. In the worst case scenario, it is only used for small cap cryptocurrencies. Best case, a new dominant cryptocurrency consensus protocol which makes cryptocurrency more efficient, secure, and accessible to everyone”
As with nearly anything in cryptocurrency, there are many contradictory opinions when it comes to Proof of Stake and Proof of Stake (POS) cryptocurrencies. If you ask the internet, it’s either a outright scam or the future of cryptocurrency.
The answer, as with many things, lies in the middle of the 2 extremes. Proof of stake has its faults, but it also holds a tremendous amount of upside potential. This article intends to clear up some information on proof of stake and inform readers of how this consensus mechanism works.
Introduction to how proof of stake works
For those unfamiliar with Proof of Stake, it can be thought of as a consensus engine similar to Bitcoin’s “Proof of Work”. Bitcoin’s big innovation was solving the byzantine generals problem, and once that was solved, others could improve on it. Proof of stake is one such improvement, choosing to use economic incentives and disincentives to secure the network rather than competitive wasteful POW mining.
While it may seem complicated, it’s actually pretty simple if you know the basics of a blockchain. In Bitcoin specialized computers burn electricity hashing, which is the equivalent of trying combinations on a lock, to earn the right to create a new block and update the ledger.
This quickly became expensive in electricity and powerful computers. So if an attacker wanted to attack Bitcoin, they would have to invest in the electricity and powerful computers first. And, taking into account the block reward and transactions fees for this investment in mining, it quickly becomes more profitable just to participate in the system rather than attacking it.
Proof of stake, just went about this problem a different way. With proof of stake coins if you want to “mine” or produce more blocks, you first need to invest like in Bitcoin. But, instead of investing in specialized computers and electricity, you need to invest in the POS cryptocurrency itself.
Once you have bought the cryptocurrency to attack the system, your invested and it becomes more profitable to participate and be honest instead of attack. POS miners (stakers) get rewarded like Bitcoin miners do with new coins and transaction fees. But, in POS there is also disincentive, as if you are dishonest and do attack the network, your investment will be taken away from you. This disincentive of losing your coins, gives proof of stake networks high security very quickly, even before the coin matures or becomes economically valuable.
This is obviously a simplification of how the process works, but it covers the basics. Below is a chart comparing mining Bitcoin’s proof of work to proof of stake.
Proof of Work (ex. BTC)
Proof of Stake (ex. PIVX)
Investment required to become a miner
Buying specialized computers and electricity
Buying proof of stake cryptocurrency
Incentivized to mine and secure the network
Newly issued coins and transaction fees
Newly issued coins and transaction fees
Disincentivized to attack the network
Would make mining computers useless
Could/would lose coins put up for stake
Barriers to Entry
(Very High) not easy to participate at all:
Economies of scale, electrical contracts, specialized computers, fast networks
(Low): Easy for anyone to participate with average computer and connection to internet
The Good about Proof of Stake
- Doesn’t purposely waste electricity
- Is secure and solves the same problem as Proof of Work
- POS is actually more secure in many cases
- Everyone can participate in Mining
- Investment can go into the protocol instead of external mining computers and electricity
As mentioned above, the process of “mining” or securing the network in a POS system is called Staking. When you stake your cryptocurrency, you basically lock coins in your wallet as collateral that you will not be dishonest. And if you are honest and participate in relaying transactions and securing the network, then you are rewarded with new coins and fees. If you are dishonest and attack, you lose your coins.
An exciting benefit of proof of stake, which is that anyone can stake. There are very few barriers to entry when it comes to staking. If you have a computer which is on 24/7 and can run a wallet, you can stake. And for those that don’t have either, there are services that will stake your coins for you and make it even easier to participate in mining.
The downside of Proof of Stake: it’s not Bitcoin
While proof of stake is superior in many ways, it does have downfalls compared to Bitcoin.The original Bitcoin idea and white paper struck a beautiful balance of incentives. Proof of work is a ruthless and extremely competitive consensus mechanism because it is so wasteful. While it bad for the environment, it is also a hidden gem to why Bitcoin is so valuable.
One point being it requires constant re-investment, innovation, and competition. Miners always have an incentive to get better: cheaper electricity, better miners, better cooling, faster connections ect… They also become so invested in otherwise useless infrastructure, that they have to innovate, market, and passionately pursue users and use cases to grow the Bitcoin network and make Bitcoin profitable, otherwise they will lose their investment.
Proof of Stake Can get Lazy
Proof of stake doesn’t have this, which is its biggest downfall as an economic system. Miners do not have to continuously invest and innovate and can be quite lazy and still participate. There is also the issue of “The rich getting richer”. Rich lazy stakers can just sit back and grow proportionately richer compared to new participants, without doing any extra work. As they have significantly less incentive to improve the system and drive value than POW miners.
But with that being said, not all cryptocurrencies are driving and competing specifically to be money like Bitcoin. Ethereum is a good example, which is why it is switching to proof of stake. Ethereum was never meant to be “money” like Bitcoin, but rather a decentralized application platform with a monetary token. And while rich stakers can be lazy, they still have economic incentive to increase the value of their holdings and staking rewards.
Different Varieties of Proof of Stake
As of this writing Bitcoin and Ethereum both use proof of work. However, they are completely different varieties of the proof of work consensus mechanisms. The use different miners, different block rewards, different transaction fees, and are just different. However, they reach consensus the same way by using computers to wastefully burn electricity in order to secure the network. Keep in mind best proof of stake coins are not easy to find so you need to do some research,
The same variety exist within proof of stake. 2 coins can both be proof of stake, but be completely different at the same time. Some examples of aspects they can differ in are:
- Issuance Rate (% APR equivalent)
- Staking Frequency
- Staking Maturity (how long coins need to stake before they can mine)
- Required stake(collateral) to mine
This list is not all encompassing, as there are many other ways POS coins can differ
Different Types of Proof of Stake
So while there are many varieties of proof of stake, there are also different implementations or types. Proof of Stake is a general term and describes a lot in regards to the consensus model. However, proof of stake is commonly used alongside other consensus mechanisms which allows it to take on different properties. Proof of work coins need computers and machines to run all the time and eat a lot of electricity.
Type of POS
General Proof of Stake
any wallet with staking setting on receives staking rewards for being connected and helping secure/connect network.
Large stakers get extra privileges and rewards and is usually combined POW or normal POS
Top wallets/people are selected via votes to be able to produce blocks and earn staking rewards
Combination masternode, delegated POS, and Normal POS.
How to get involved
So now that you have the general overview of what proof of stake, now comes how to get involved! There are hundreds of Proof of Stake coins and projects doing 100’s of different things that you can learn about and get involved in. Whether its running a masternode and sending private transactions on Exclusive coin, or participating in voting on DPOS on BTS, STEEMIT, or EOS. There are countless opportunities to get involved.
Getting some POS Coins
The first part in getting involved with any proof of stake project is to get some coins! You don’t need to invest a large amount of money, or invest at all to get involved. However, if you do decide to invest always always do your own research and take note these are very high risk investments and this article is in no way financial advice.
Some ways to get POS coins-
- Sign up and write articles on Steemit to earn steem
- Visit proof of stake coin faucets and get some coins risk free
- Buy some coins on an exchange
Once you have some coins put them to work and earn staking rewards. Staking wallets are no harder than normal desktop wallets to run. However, like any desktop wallet, they do require some skills and take up storage and resources from your computer. If you are not the best with computers, or if your computer is slow enough already without wallets, staking pools are a great option
A staking pool is a group of people that pool all of their proof of stake coins together and stake in 1 wallet which is usually a website/service. This means you will get smaller staking payouts much more often than staking by yourself in your own wallet. For example, if you buy your staking coins (or claim them from the altcoin faucet) at Btcpop.co (which is an exchange and staking pool) they will automatically be staked for you. So with no additional work, you can start proof of stake mining as easy as any exchange.
Some staking pools are:
If you want to get in on Masternode rewards, but don’t have enough coins yet for a full masternode you can still get involved. Similar to a staking pool, shared masternode services pool coins and launch/run masternodes for users for a small fee. The rewards are then distributed proportionately to the users in chunks or shares.
Some Shared Masternode services
In conclusion, proof of stake is a promising consensus mechanism with a lot of potential upside in the future. It competes well will the popular proof of stake cryptocurrencies and has the potential to surpass them in the future not wastefully burning electricity and rather investing and improving speed and usefulness of POS networks. And one of the most important aspects of proof of stake is that its very easy to get involved and unlike POW, anybody anywhere can participate in proof of stake mining and collect many coins at these cheap prices.
Proof of Stake Cryptocurrencies List
Binance Coin BNB,Stellar XLM,Dash ,NEO ,Cosmos ATOM,ExclusiveCoin EXCL, Ontology ONT,V Systems VSYS,Decred DCR,QTUM,NANO,ICON ICX,Pundi XNPXS,WAVES,Komodo KMD,HyperCash HC,IOStoken IOST,ABBC Coin,Stratis STRAT,Project PaiPAI,FactomFCT,ReddCoin RDD,WaykiChainWICC,WanchainWAN,PIVXPIVX,NxtNXT,ParticlPART,VitaeVITAE,NexusNXS,BlocknetBLOCK,IRISnetIRIS,AchainACT,MetaHashMHC,SaluSSLS,APISAPIS,NeblioNEBL,Lightning BitCoin LBTC,ClamsCLAM,PRIZMPZM,TokenPayTPAY,NAV Coin NAV,LokiLOKI,WhiteCoin XWC,SmartCashSMART,ElectraECA,StakenetXSN,PeerCoin PPC,Metrix Coin MRX,BOSCoin BOS,Sentinel ProtocolUPP,VeilVEIL,DeepOnionONION,EmerCoin EMC,LEOCoin LEO,DiviDIVI,UlordUT,Zen ProtocolZP,BlackCoin BLK,HTMLCoin HTML,RadiumRADS,OKCashOK,FootballCoin XFC,VINChainVIN,ObserverOBSR,MintCoin MINT,I/O Coin IOC,DECENTDCT,PhorePHR,LUXCoin LUX,PacCoin PAC,StealthXST,Vipstar Coin VIPS,Fast Access BlockchainFAB,PotCoin POT,Beetle Coin BEET,Cashbery Coin CBC,SemuxSEM,Experience PointsXP,FlashFLASH,HappyCoin HPC,IONChainIONC,CloakCoin CLOAK,BitGreenBITG,eXPerience ChainXPC,LunesLUNES,WebDollarWEBD,NasdaCoin NSD,PinkCoin PINK,SafeInsureSINS,DenariusD,42-Coin 42,EssentiaESS,ESBCESBC,BitCoin PlusXBC,TrittiumTRTT,StrongHandsSHND,Miners’ Reward TokenMRT,KekCoin KEK,DNotesNOTE,LobstexLOBS,Mao ZedongMAO,Titan Coin TTN,ODUWAOWC,EnergyCoin ENRG,BitCoin IncognitoXBI,TelosCoin TELOS,Scorum Coin sSCR,ZeitCoin ZEIT,VulcanoVULC,The ChampCoin TCC,ALQOXLQ,StakinglabLABX,DopeCoin DOPE,StakeCubeCoin SCC,ATBCoin ATB,Block-LogicBLTG,EDRCoin EDRC,AllSafeASAFE,KalkulusKLKS,SPIDER VPSSPDR,TittieCoin TIT,UnifyUNIFY,BitblocksBBK,GiantGIC,MMOCoin MMO,ProCurrencyPROC,AegeusAEG,PAWS FundPAWS,BriaCoin BRIA,TransferCoin TX,BitWhiteBTW,MedicCoin MEDIC,XuezXUEZ,GexanGEX,Gold PokerGPKR,CarebitCARE,LogisCoin LGS,Quantis NetworkQUAN,MiraiMRI,OurCoin OUR,PandaCoin PND,BitNewChainBTN,RubyCoin RBY,OndoriRSTR,VitesVITES,ColossusXTCOLX,FairCoin FAIR,MintCoin MINT,BitCoin ConfidentialBC,SafeCoin SAFE,HiCoin XHI,GolfCoin GOLF,HempCoin THC,win.winTWINS,Credit Tag ChainCTC,EspersESP,OrbitCoin ORB,13371337,TrezarCoin TZC,ShardSHARD,SproutsSPRTS,EUNOEUNO,B3Coin KB3,SolarisXLR,BuzzCoin BUZZ,MagiXMG,HyperStakeHYP,AudioCoin ADC,Crypto SportsCSPN,HeliumHLM,LiteDogeLDOGE,Bettex Coin BTXC,ZenniesZENI,TrollCoin TROLL,FORCEFOR,NeutronNTRN,WisprWSP,OPCoin XOPCX,EverGreenCoin EGC,PowerCoin PWR,XGOXXGOX,LanaCoin LANA,Social SendSEND,PoSW Coin POSW,MNPCoin MNP,Deutsche eMarkDEM,GravityGZRO,MoinMOIN,UniverseUNI,NetkoNETKO,BlueCoin BLU,PENGPENG,TrumpCoin TRUMP,VersionV,PutinCoin PUT,PayCoin XPY,BitstarBITS,StrongHands MasternodeSHMN,DeviantCoin DEV,Dash GreenDASHG,AquariusCoin ARCO,Dash GreenDASHG,AquariusCoin ARCO,PeepCoin PCN,StipendSPD,TittieCoin TIT,GalilelGALI,SequenceSEQ,TagCoin TAG,RimbitRBT,CondensateRAIN,OpalOPAL,2GIVE2GIVE,Advanced Technology Coin ARC,BitBarBTB,SwiftCashSWIFT,IgnitionIC,ChessCoin CHESS,Monkey ProjectMONK,DogeCash DOGEC,VsyncVSX,BTCtalkCoin TALK,WomenCoin WOMEN,HollyWoodCoin HWC,ShekelJEW,SuperCoin SUPER,iTiCoin ITI,PRiVCYPRIV,SwingSWING,RubiesRBIES,Evil Coin EVIL,Ultimate Secure CashUSC,iDealCashDEAL,MarteXCoin MXT,InterCroneICR,CDMCoin CDM,MonacoCoin XMCC,RateCoin XRA,BeaconBECN,MagnetMAG,Coin 2.1C2,BritCoin BRIT,ImpactIMX,ApollonXAP,RPICoin RPI,CraveCRAVE,TOKYOTOKC,ZoZoCoin ZZC,EVOSEVOS,KlimatasKTS,BitcloudBTDX,DigitalPriceDP,LiteCoin PlusLCP,RupayaRUPX,SignatumSIGT,X-Coin XCO,CryptojacksCJ,CashCoin CASH,CommunityGenerationCGEN,ImpleumIMPL,OP Coin OPC,LightpayCoin LPC,KingN Coin KNC,SparksPaySPK,BERNcashBERN,PlatinumBARXPTX,BlocknodeBND,DreamCoin DRM,AmsterdamCoin AMS,BoostCoin BOST,GoldBlocksGB,Safe Trade Coin XSTC,CazCoin CAZ,ProxyNode PRX,Zoomba ZBA,BumbaCoin BUMBA,SnodeCoin SND,BigUpBIGUP,DACH Coin DACHX,SecretCoin SCRT,ArepaCoin AREPA,BitCoin 21XBTC21,DigiwageWAGE,DoubloonBOAT,InflationCoin IFLT,NevaCoin NEVA,High VoltageHVCO,HoneyHONEY,Digital Money BitsDMB,SpeedcashSCS,GeyserCoin GSR,PostCoin POST,Theresa May Coin MAY,XDNAXDNA,TajCoin TAJ,Project Coin PRJ,MustangCoin MST,CatoCoin CATO,PhoneCoin PHON,SteepCoin STEEP,GrimCoin GRIM,APR Coin APR,NyeriumNYEX,Atomic Coin ATOM,GossipCoin GOSS,LitecredLTCR,UltraCoin UTC,BitCoin AdultBTAD,Independent Money SystemIMS,MojoCoin MOJO,AltCommunity Coin SONO,DystemDTEM,AdultChainXXX,OlympicOLMP,ICOBIDICOB,BZLCoin BZL,IconicICON,PosExPEX,MiloCoin MILO,EternityENT,ZealiumNZL,CryptoFlowCFL,INDINODEXIND,BitMoneyBIT,Coin onatXXCXT,CenturionCNT,BitspaceBSX,RheniumXRH,TraidTRAID,CheeseCoin CHEESE,CabbageCAB,AzartAZART,BitCoin PlanetBTPL,LevoCoin LEVO,GraphCoin GRPH,PeonyPNY,VectorVEC2,BitCoin W SpectrumBWS,iBankIBANK,BitvoltVOLT,GambleCoin GMCN,CannationCNNC,PhantomxPNX,RagnarokRAGNA,LRM Coin LRM,PurexPUREX,PrintexPRTX,StakerSTR,ConCoin CONX,Save and GainSANDG,RocketCoin ROCK,ACREACRE,ErylliumERY,Blacer Coin BLCR,Jiyo [OLD]JIYO,SmartFoxFOX,MFIT Coin MFIT,HarmonyCoin HMC,Algorand ALGO,Polkadot DOT,FOINFOIN,Ti-ValueTV,TouchConTOC,BitCoin X BCX,Infinity EconomicsXIN,ClubCoin CLUB,Rocket PoolRPL,1X2 Coin 1X2,BitCoin 2BTC2,WinkWINK,GoldenFeverGFR,WXCoin SWXC,NetrumNTR,BitCoin GodGOD,PROUD MoneyPROUD,MerebelMERI,Oculor OCUL,SpectrumCashXSM,SegWit2x (Pre-Launch)B2X,WINCoin WC,Mobile Crypto Pay Coin MCPC,TellurionTELL,BubbleBUB,CottonCoin COTN,TRUNK Coin TRO,SaveNodeSNO,Elliot Coin ELLI,PayDay Coin PDX,QuotientXQN,CARDbuyersBCARD,AvatarCoin AV,EmberCoin EMB,EscrowCoin ESCO,AcesACES,Pabyosi Coin (Special)PCS,Halloween Coin HALLO,BirdsBIRDS,Dutch Coin DUTCH,RunnersRUNNERS,CropCoin CROP,InfinipayIFP,Coin 2PlayC2P,Concierge Coin CCC,Labh Coin LABH,CivitasCIV,GIGAXG,CobrabytesCOBRA,EmaratCoin AEC,ShopZCoin SZC,CryptoinvestCTT,PandemiaPNDM,OmenCoin OMEN,Delizia DELIZ
Masternode Coins List
DASH,Energi NRG,ZCoin XZC,PIVX,SysCoin SYS,Vitae VITAE,Blocknet BLOCK,APIS,SmartCash SMART,Stakenet XSN,Metrix Coin MRX,DIVI,nOSNOS,Observer OBSR,Phore PHR,TolarTOL,PacCoin PAC,LUXCoin LUX,PolisPOLIS,CrownCRW,DiamondDMD,IONION,BiblePayBBP,BitGreenBITG,SafeInsureSINS,DenariusD,PuraPURA,ExclusiveCoin EXCL,GINCoin GIN,ESBCESBC,StrongHandsSHND,BirakeBIR,LobstexLOBS,BulwarkBWK,MemeticMEME,ZCoreZCR,BitCoin IncognitoXBI,VulcanoVULC,GentariumGTM,ALQOXLQ,StakinglabLABX,BitSendBSD,StakeCubeCoin SCC,Block-LogicBLTG,DynamicDYN,GoByteGBX,KalkulusKLKS,SPIDER VPSSPDR,TittieCoin TIT,Ether-1ETHO,ExosisEXO,GiantGIC,STRAKSSTAK,PAWS FundPAWS,AegeusAEG,TransferCoin TX,SkyHub Coin SHB,MedicCoin MEDIC,XuezXUEZ,GenesisXXGS,AbsoluteABS,GexanGEX,Gold PokerGPKR,CarebitCARE,LogisCoin LGS,DesireDSR,Quantis NetworkQUAN,MiraiMRI,OurCoin OUR,OndoriRSTR,ColossusXTCOLX,HempCoin THC,TerraCoin TRC,SolarisXLR,Bettex Coin BTXC,Crypto SportsCSPN,HeliumHLM,NoirNOR,NeutronNTRN,OPCoin XOPCX,MNPCoin MNP,Social SendSEND,KoreKORE,RupeeRUP,PENGPENG,StrongHands MasternodeSHMN,InsaneCoin INSN,DeviantCoin DEV,BitradioBRO,Dash GreenDASHG,FantasyGoldFGC,StipendSPD,Advanced Technology Coin ARC,IgnitionIC,Vivid Coin VIVID,Monkey ProjectMONK,VsyncVSX,GalactrumORE,InnovaINN,MarteXCoin MXT,MagnetMAG,ApollonXAP,BeaconBECN,ShekelJEW,EVOSEVOS,KlimatasKTS,DigitalPriceDP,BitcloudBTDX,SnodeCoin SND,LightpayCoin LPC,Gold PokerGPKR,AceDACED,SparksPaySPK,ImpleumIMPL,BlocknodeBND,APR Coin APR,ProxyNodePRX,ZoombaZBA,CazCoin CAZ,PAXEXPAXEX,DigiwageWAGE,SCRIV NETWORKSCRIV,DACH Coin DACHX,CreamCRM,KZ CashKZC,VIVOVIVO,XDNAXDNA,PhoneCoin PHON,CatoCoin CATO,NyeriumNYEX,GossipCoin GOSS,BitCoin AdultBTAD,DystemDTEM,AdultChainXXX,OlympicOLMP,EternityENT,ZealiumNZL,CryptoFlowCFL,INDINODEXIND,BitMoneyBIT,Coin onatXXCXT,ROIyal Coin ROCO,TraidTRAID,RheniumXRH,RenosRNS,CheeseCoin CHEESE,AzartAZART,GraphCoin GRPH,DineroCoin DIN,RagnarokRAGNA,GambleCoin GMCN,FolmCoin FLM,PhantomxPNX,LRM Coin LRM,PurexPUREX,QbicQBIC,PrintexPRTX,QYNOQNO,XchangeXCG,Blacer Coin BLCR,SmartFoxFOX,MFIT Coin MFIT,AXEAXE,ZenonZNN,BitCoin 2BTC2,GoldenFeverGFR,NetrumNTR,MerebelMERI,OculorOCUL,HiluxHLX,Mobile Crypto Pay Coin MCPC,CottonCoin COTN,TRUNK Coin TRO,SaveNodeSNO,CARDbuyersBCARD,EscrowCoin ESCO,PayDay Coin PDX,InfinipayIFP,Crypto Improvement FundCIF,Coin 2PlayC2P,Concierge Coin CCC,CivitasCIV,GIGAXG,CryptoinvestCTT,PandemiaPNDM