Mining in cryptocurrency is securing and verifying transactions (called blocks) along with the blockchain. Cryptocurrency mining (also called crypto-mining) helps to keep network security by ensuring that only valid blocks are recorded on the digital ledger. Participants in the mining process get rewarded for dedicating their resources and time to solving computational algorithms. Cryptocurrency mining can be done in either Proof of Work (PoW) or Proof of Stake (PoS) consensus, depending on the coin. Let’s examine what Proof of Stake is, how it works, and which cryptocurrencies currently use this method. What’s Proof-of-Stake? Proof of Stake is an alternative consensus mechanism, which was first implemented in 2012 in the PPCoin cryptocurrency (now known as PeerCoin). The main idea of PoS is to use “stake” as a resource that determines which node gets the right to mine the next block. In the Proof-of-Stake approach, nodes also try to hash data looking for a result less than a specific value. However, the complexity is distributed proportionally and by the balance of the given node. In other words – by the number of coins (tokens) in the user’s account. Thus, a node with a large balance has a higher chance of generating the next block. The scheme looks quite attractive, first of all, because of the small requirements for computing resources, and also because there is no question of “wasted” capacity. How does Proof-of-Stake work? The PoS mechanism has two parts. First, the validator node must contribute the blockchain platform tokens as a stake. These tokens are frozen for a certain period. A higher steak increases the chances of a node being selected to forge a block. It is worth understanding that PoS works on the principle of prioritizing nodes with higher stakes. Thus, the validator takes more part in the process. It will not work out differently from an economic point of view. The second part of PoS involves choosing a validator for block forging (generation) at random. There are several ways to select validators, including: Sampling by coin age considers the time the validator node spent on staking its coins. Moreover, it includes the total number of all staked coins. When a node is selected by the validator, the “age” of its coins is reset. Also, the validator node must wait a certain amount of time before forging another block again.Block randomization is centered on validators with high staking rates and low hash values. It is important to note that every member of the network can see the stake that the validator node pushes.Once a node is selected, the validator node validates transactions within the block and then signs it. Other validator nodes confirm whether the block is valid. If most validators decide in favor of a block, the block becomes part of the blockchain. The selected validator node will then receive the transaction fee as a reward. However, suppose the block is classified as fake (erroneous) by other validators validating the block. In this case, the selected validator loses part of the bet, and the process is restarted. Therefore, the forger will be restricted in any block forging (generation) activity. What about Pos Crypto Pooling? It is possible to pool funds to participate in staking and earn profits from coins with very high staking amounts. There are two ways to do this. You can give your coins to another user who will stake and then share profits with you. It should be with a reliable person known to you. The other method is to join a staking pool. Here you get to join some of the biggest holders. Benefits of a Pos Coin consensus system Proof of Stake consensus mechanism doesn’t require specialized and expensive hardware to run. You only need an internet connection and a functional computer setup.Anyone with enough coins to stake can validate transactions on the network.Investments in a PoS system do not depreciate with time like what happens to ASICs and other mining hardware. A validators’ initial stake can be affected by price fluctuations and trading rates.Proof of Stake is more energy-efficient and environmentally friendly than Proof of Work regarding power consumption.Reduced threat of 51% attack. Although the PoS consensus algorithm does sound great, there is one disadvantage – decentralization is not possible. It’s because staking can still be monopolized by a few of the nodes on the network. Those that have the most coins can effectively control most of the mining. Most Profitable Proof Of Stake Coins When you invest in a Proof-of-Stake coin you have the added benefit of the possible appreciation in the coin value. Moreover, there are also returns on possible staking. But which are the best PoS coins to invest in currently. Below are a few you may want to consider. NEO NEO is a decentralized blockchain platform for developing a smart economy. It uses cryptocurrency and blockchain technology for this purpose. NEO’s proof of stake algorithm uses the delegated Byzantine Fault Tolerance (dBFT). Participants on the NEO platform can stake their coins to earn a reward in the form of “GAS”. When staking with the NEO gas, all you need is to have the NEO coins in your NEON wallet. You get an annual reward worth 5.5% on all the coins you stake. The best thing about NEO staking is that you do not have to be online all the time. Lisk Lisk (LSK) uses a form of staking called the delegated Proof of Stake consensus algorithm. To participate in securing and verifying transactions on the Lisk platform requires you to have enough LSK and be one of the top 101 delegates. A delegate is an account that has been voted for by other LSK holders to complete transaction blocks. Delegates are chosen through voting on a rolling basis. You get rewarded with LSK for generating new blocks and securing the blockchain. Stratis Stratis (STRAT) is a blockchain-based cryptocurrency platform built in the C# code. Its token coin STRAT is used when generating new transaction blocks using the Proof of Stake consensus mechanism. Staking is done using the Stratis Desktop Wallet. When you stake your STRAT coins, you earn an annual interest of 5.1%. It’s in addition to the block rewards and transaction fees shared among stakers. PIVX PIVX stands for Private Instant Verified Transaction. PIVX is a privacy-oriented blockchain-based cryptocurrency. It forked off DASH in 2016 and fully implemented the proof of stake consensus algorithm. The crypto does not have a minimum or maximum staking amount, which means even those with the least amount of PIVX, can still participate and earn rewards. Staking is enabled using the PIVX Desktop Wallet. To run a master node and therefore earn more in rewards, you need to have 10,000 PIVX. So, you get an annual approximation of a 5% return on investment (ROI). OkCash OkCash was launched in 2014. It is a cryptocurrency suitable for micro-transactions and uses the proof of stake consensus mechanism to secure and verify transactions on its network. OkCash provides one of the best ROI on staking. To participate, a user transfers OK coins into a particular staking wallet. The bonded coins will be used to verify transactions while they earn rewards in the form of OkCash. Staking on the OkCash network will earn you an annual return of 10% on stake value. OkCash is a low-barrier coin because it doesn’t have any caps on the amount you can stake. NAV Coin NAV Coin is a cryptocurrency built on Bitcoin’s code. It is a Proof of Stake coin that has distinguished itself as a dual blockchain suitable for private transactions. You can earn up to 5% returns on top of your stake. Staking with NAV, the native coin, is done on the NAV Coin Desktop wallet. As with OkCash, NAV Coin has no caps placed on you can stake. Summary Cryptocurrency mining is one way of getting crypto coins into circulation. Proof-of-stake is similar to POW in this respect. However, as decentralization and cheaper transactions become more significant, the use of PoS could help by cutting on hardware costs and electricity needs. That’s why we have Ethereum implementing its Casper protocol that will see it move from a Proof of Work system to a proof of stake mechanism. When it does, it will be one of the best due to its popularity and market cap. Other Cryptocurrencies that you can stake to earn rewards are NXT, PeerCoin, Stellar, and Bitshares.