May 18, 2021

What is Proof-of-Stake?

Over time, the proof-of-stake consensus mechanism otherwise referred to as “PoS” has been described as one of the most advanced and energy-efficient mechanisms ever. Well, that is not far from the truth.

The PoS mechanism which is simply a method blockchain uses to protect the integrity of a crypto asset according to Ripple's co-founder Chris Larsen is a better and more efficient mechanism than the PoW which is said to be inherently flawed.

The second most valuable crypto asset Ethereum in a bid to become scalable, to meet the needs of the growing users and decentralized applications has proposed an upgrade tagged “Ethereum 2.0”. One of the core features of this upgrade is the segue from the inefficient and energy-consuming proof-of-work mechanism to the PoS. This decision has been discussed overtly by experts and crypto enthusiasts alike.

Arguing for PoW

Most experts according to various reports claim that the PoW mechanism is efficient and that since it has been serving Bitcoin and Ethereum for years, they see no need to switch to something else. This line of thought is in line with that of those that argued earlier last week during Earth Day that crypto mining activities do not have much effect on the environment as most people have claimed all these years. 

Arguing against PoW

Some of the other experts arguing in favor of the PoS mechanism have called the PoW an inefficient mechanism that's incapable of enabling scalability, an important feature of any acclaimed crypto asset. One of these major crypto experts is Chris Larsen, Ripple Labs CEO. In a recent blog post published by the co-founder, he claims that Bitcoin and cryptocurrencies, in general, should abandon the PoW mechanism not only because it affects the environment negatively but because of its inability to enable crypto networks to efficiently scale, by handling transactions on different chains in a process referred to as sharding.

Arguing further, the CEO citing Ripple as an example revealed that the network in its nine years of existence has processed over 69 million transactions. Ripple, a Federated Consensus powered crypto network according to Chris, uses the same energy as 50 United States homes annually, way less than what the other PoW-based networks make use of.


With all of these experts arguing for and against these networks, the PoS mechanism has come out on top because of the many features it offers. For example, on the new Ethereum network, PoS will introduce sharding, a process of verifying transactions on a different chain before adding them to the blockchain. This increases transaction speed as well as reducing the cost of initiating transactions on the network.

Finally, the PoS mechanism already gaining massive adoption is energy efficient. It uses less power and allows for the integration of advanced protocols to ensure that double-spending and other malicious activities are eliminated from crypto networks.

With the price of Bitcoin surging and already above the $54,000 mark (at the time of writing), global adoption is imminent and would require a scalable network, proof-of-stake mechanism preferably. 

Jack Evans

About the author

I became a crypto asset owner in 2014, when the industry was in its infancy. Before that, I was working in the classic US and European stock markets. Since then, I have gained extensive experience in both cryptocurrency investing and day trading. I am happy to share with readers my experience with crypto exchanges, DeFi and NFT instruments. 

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