PoS mining is one of the main terms in the world of cryptocurrency. This is a common type of block creation. It is based on the proportional distribution of remuneration depending on the total number of coins on the user’s balance. Using this technique, you can create an effective option for passive income with a high level of profitability.

The implementation of the PoS protocol in cryptocurrencies allowed coin holders to earn interest on the amount that is on their wallet. This happens as follows: if on your wallet there is, say, 1% of the total mass of coins mined by the community, then you will receive 1% of all generated blocks just for holding this cryptocurrency in your wallet. This is very similar to a bank deposit when you receive a certain percentage once a year for the fact that your money is in the bank account. So PoS works on the same principle. Only here the time intervals here can be completely different.

What are the pros and cons of PoS?

In this consensus model, the number of coins you keep in your wallet matters, as we said above. Accordingly, the larger the size of your deposit, the greater the chance that you will not collapse the system (because you will have too much money that will depreciate if the system is compromised).

At the same time, standard PoS also has disadvantages. In particular, since the holder of a larger steak is more likely to validate the block, “the rich become richer.” Consequently, only sufficiently large stakeholders have real incentives to support the network. For small coin holders, such network support may not make economic sense. To solve this problem, the developers of the new coin tokenomics have to either tear up inflation for the first period (which leads to a drop in the price of the currency in the long term) or put up with less decentralization.

Does PoS have a future?

It is believed that PoW is a temporary, vulnerable solution, while PoS is the next step in the development of the market.

For many years now, there has been an active discussion of the transition to PoS, the second Ethereum cryptocurrency capitalization. Obviously, the concept of PoS and its application are at an entry-level. Ethereum has a fairly large and active community of developers, large fund resources, and it took them more than 2 years to work out the application of the concept, and implementation is still ongoing.

MTCore offers an alternative — green and innovative system called BIDERATION.