Proof of Stake (PoS)

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Proof of Stake (PoS) is a is a blockchain protocol in which the creator of the next block is chosen in a deterministic (pseudo-random) way, and the chance that an account is chosen depends on its wealth (i.e. the stake).

Proof of Stake cryptocurrencies can be faster and much more cost effective in comparison with Proof of Work (PoW) based ones (such as Bitcoin). The incentives of the block generator are also different. Under Proof-of-Work, the generator may potentially own none of the currency they are mining. The incentive of the miner is only to maximize their own profits. In Proof of Stake, those "guarding" the coins are also those who own the coins.

Steem uses Delegated Proof of Stake (DPoS) which is the fastest, most efficient, most decentralized, and most flexible consensus model available. DPOS leverages the power of stakeholder approval voting to resolve consensus issues in a fair and democratic way. All network parameters, from fee schedules to block intervals and transaction sizes, can be tuned via elected delegates. Deterministic selection of block producers allows transactions to be confirmed very quickly. Perhaps most importantly, this consensus protocol is designed to protect all participants against unwanted regulatory interference.


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