Some time ago, when the price of coins was rising, few people read the learning knowledge such as "Blockchain Introduction", so Blockchain Legend did not continue to write content in this area. However, the recent decline tells us a fact: the era of making money by buying coins randomly is over. If you want to make money in the future, you must learn more about blockchain knowledge. You must first understand what project you are investing in. As the old saying goes, only by knowing yourself and the enemy can you win every battle. Believe me, when you understand a little bit of the basics of blockchain, you will find that many Aixiou are full of loopholes and are meant to deceive fools.

Introduction to blockchain

Considering that the people who have been following me recently are all new to the cryptocurrency circle, it is necessary to start with the basics. I wrote an article last time:

What is POW mining? What digital coins are worth mining now?

Today, let’s talk about another mining method that may replace POW: POS mining. This year, ETH is likely to switch from PoW mining to PoS mining.

POS Proof of Stake

What is PoS Mining?

POS: Proof of Stake

The POS mechanism is a system that pays you interest based on the amount and time you hold a certain digital currency. There is still computing power mining, which requires computing power to solve a mathematical problem. But the difficulty of the mathematical problem is related to the "coin age" of the coin holder. Simply put, the longer the coin holder holds the coin, the simpler the problem, and the greater the probability of mining the coin.

For example: In the proof-of-stake POS mode, each coin generates 1 coin age every day. For example, if you hold 100 coins for a total of 30 days, then your coin age is 3000. At this time, if you find a POS block, your coin age will be cleared to 0. For every 365 coin ages cleared, you will get 0.05 coins of interest from the block (which can be understood as an annual interest rate of 5%). In this case, interest = 3000 * 5% / 365 = 0.41 coins. This is very interesting. Holding coins has interest, which is very good! (It should be noted that the 5% annual interest rate is just an example given by the editor. Not every coin in the POS mode is 5%. For example, PPCoin has an annual interest rate of 1%).

The core logic of the POS mechanism is that whoever holds the currency has control over the network.

When we talk about mining, we usually mean mining with PoW mining machines. When it comes to mining PoS coins, people usually use the term "interest". PoS mining allows coin holders (anyone with a balance in their blockchain wallet) to perform PoS mining by holding proof of blockchain.

In fact, there is a big difference between mining and interest of PoS coins. When mining PoS, our coins are still in our hands. When we get interest from the bank, we have already lent the money to the bank. The PoS model is safer than the bank!

Of course, PoS mining, like PoW mining, can maintain the growth and security of the blockchain.

What is the difference between Pos and Pow?

What is the difference between PoS mining and PoW mining?

The different places are probably as follows:

First, the sources of computing power are different

In PoW mining, the computing speed of the mining machine (CPU, graphics card, ASIC, etc.) determines who is more likely to mine, but it is different in PoS. PoS mining does not require you to buy additional mining equipment, nor does it take up a lot of computing resources. In PoS, the "number of coins" and "coin age" determine who is more likely to mine coins. The number of coins is very simple. For example, if you have 100 coins, then the weight of your coin is 100. The coin age is the time difference from the last change of the coin (transaction, mining, etc.) to the current time point. The more coins you have and the longer the coin age, the more likely you are to mine blocks.

Secondly, the number of coins issued is different

In PoW, the coins produced in a block have nothing to do with the coins you hold, but in PoS, the more coins you use to mine, the longer the age of your coins, and the more coins you mine. For example, if you have 1,000 Apple coins and these Apple coins have not been used for half a year (183 days), then the number of coins you have mined is as follows:

1000 (number of coins) * 183 (coin age) * 15% (interest rate) = 274.5 (coins)

Of course, generally we have more coins and a shorter coin age, so the coins mined in the end will be different. But the general formula is this.

Why switch from Pow to Pos mining?

Since 2018, many digital currencies including ETH have begun to switch from Pow to Pos, or adopt a hybrid model of the two. Why is this?

This is mainly because under the POW mechanism, miners consume huge computing power, which raises the handling fee cost. Once the government bans the mining farm, the entire network faces the threat of paralysis. However, under the POS mechanism, the difficulty of mining has little to do with computing power, but has the greatest relationship with the amount of coins held and time, so there is no high cost of electricity consumption. In addition, miners themselves are also coin holders, and if they have the need to transfer money, they will not raise the handling fee too high. Therefore, it is faster and cheaper than the network transfer of the POW mechanism, and has become a new development direction.

Huge Pow mining farms waste countless energy

So how to mine coins using PoS?

The answer is simple: first, the coin you want to mine must support POS mining. For most PoS coins, transfer the coin to your wallet, keep the wallet open, and unlock the wallet password. At this time, the wallet is in the mining state.