The POS Consent System – Proof of Stake

The POS consent system (proof of stake) is used in 2-generation cryptocurrencies such as Dash, Pivx, Zcoin, etc.

With this system there is a proof of confidence through the demonstration of the possession of a certain amount of that cryptocurrency.

This amount will be frozen as a guarantee, which if lost, this amount could be lost.

The features of this system are that:

  • No one has control over the information;
  • The network continues to function and move forward;
  • Everyone can participate;
  • It is Decentralized;
  • It has a low operating cost;
  • You can do many more transactions per second than POW.

How the POS Consent system works

schema di consenso POS

Unlike the POW system, the POS consent system uses the freezing of a specific cryptocurrency.

Everyone going to freeze these crypts, will keep the network and consequently validate the blocks.

The freezing takes place on a certain number of a specific cryptocurrency, ie for example it will take 1000 Dash to make the block validator.

By doing this freezing, the calculations will be resolved, which will then be confirmed in the blockchain.

The reward system is based on the number of frozen cryptocurrencies that you have, unlike the POW that depends on the computing power.

The operating principle is the MASTERNODE which are the fulcrum of the network of these cryptocurrencies.

The masternodes

The masternodes are validation nodes of the cryptocurrency blocks that have the POS consent system.

In short they are dedicated VPS servers with the cryptocurrency wallet installed with frozen tokens inside.

This wallet linked to the cryptocurrency blockchain, validates the blocks along with all the wallets in the network.

In addition, the wallets also flow the rewards you have for maintaining the network.

There are services such as Masternode Online where you can see all the information on the masternode of the various cryptocurrencies, the return times, the cost, etc.

The Pros and Cons of the POS Consent System

This system has pros and cons that we can identify as follows:

Pros

  • Low cost of execution;
  • Low equipment maintenance;
  • Transaction speed;
  • Low transaction fee;
  • Many more Transactions per second.
  • Cryptocurrencies are more scalable

Cons

  • Cryptocurrencies devalue very quickly;
  • In case of “failure” of the cryptocurrency, all the investment made unlike the POW that will remain with the equipment will be lost;
  • Difficulty in configuring masternodes on servers when knowledge of Linux systems is required, Ubuntu.

Obviously there are cases like Dash when it was the first project born with this concept, it turned out to be an excellent investment.

There are a number of projects that have proven to have a problem in maintaining this consensus system over time.

These cryptocurrencies devalue very quickly when they have too many high rewards and therefore those with masternodes sell and depreciate the currency very quickly.

Consequently the projects increase the minimum amount for the guarantee of the masternodes by decreasing the decentralization of the same concentrating it on a few masternodes.

In fact, looking at this graph of a cryptocurrency called Paycore (PCR) taken as an example, we note that with the increase of time the number of masternodes has decreased dramatically due to the collapse of the price.

grafico tipo

Conclusion

This system of consent has certainly improved some problems of the POW but has also worsened some.

Certainly it is a good system of consent because it still has low maintenance costs, and this is fundamental today.

In fact Ethereum is thinking of transforming its structure from the POW to the POS that should take place in 2020.

This will allow the cryptocurrency to be more scalable, faster, and cheaper than today.

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