Proof of stake (PoS) is a consensus mechanism, where miners can mine or validate transactions on the blockchain according to how many coins they have.

Proof of stake utilizes the actual coin itself and is staked by the current owner. When a transaction is initiated, the transaction data is fitted into a block (of up to 1 megabyte in size, before being duplicated across multiple devices and networks.

Miners help verify the legitimacy of these transactions by solving a computational puzzle; this is also known as a ‘proof of work problem’. The first miner that manages to solve this puzzle is rewarded with a coin. This verifies the transaction, adding it to the blockchain. People who ‘stake’ their coins are able increase their chances of receiving a reward by holding more coins.

People can combine masternodes and proof of stake together to obtain extra governance voting weight and rewards, which are distributed to those securing the networks.

Attackers would need to obtain 51% of the cryptocurrency to launch a 51% attack on a POS system. Proof of stake is more energy-efficient and secure, making it a great alternative to proof of work.