Introducing Staking: learn how to make your assets work for you.
It starts back in 2008 with the birth of Bitcoin, which came with two of these consensus mechanisms: Proof of Work (PoW) and Proof of Staking (PoS).
But first: what is a consensus mechanism?
What is the Proof of Work (PoW) consensus mechanism?
Proof of Work is the method used to verify transactions and generate new blocks in a blockchain network, confirming the veracity of each transaction and recording them in the ledger or chain ledger.
Through the Proof of Work (PoW) protocol, miners have to solve complex mathematical problems in order to verify transactions and add blocks to the chain.
This procedure involves the use of processing units and special electronic circuits since the more computing power you have or mining power, the more advantage you will have in mining to solve complex mathematical problems, resulting in considerable investment, high energy consumption, and a certain amount of time to be able to make the investment profitable.
What is the Proof of Stake (PoS) consensus mechanism?
What is Staking and how does it work?
These rewards are generated thanks to our currencies will be used to ensure the proper functioning and add new blocks to the associated blockchain and also supporting the security of this.
It can be said that we would be doing a kind of mining of our cryptoassets but without having to make a big investment in mining hardware or high electricity costs.
It should also be borne in mind that the greater the cryptoassets that a participant puts into staking, the higher the rewards received. And that the whole rewards process is completely automatic and the staking is a passive activity.
To finish, this image has a comparison of Proof of Work (PoW) and Proof of Stake (PoS) to make it even easier for you to compare.
We hope this introduction to the Staking and major blockchain consensus mechanisms has helped you to understand a little better what this is all about and that you will use it to put your assets to work for you.
See you soon!