Mining by people far from this topic is usually associated with large data centers in which thousands of ASICs or GPU rigs are noisy on the balcony. But there is also an alternative way – this is Proof-of-Stake (proof of stake).
PoS mining is based on the fundamental principle of capitalism: “Money makes money.” In blockchain networks based on Proof-of-Stake, trusted nodes are involved in confirming transactions and generating new blocks. They must have a certain number of tokens on the balance sheet and receive a reward for their work. This is a common consensus algorithm, and it has several subspecies, differing in the schemes for assigning validators and calculating payment for services.
Due to this technique, you can create an effective version of passive income with a high level of profitability. It remains to figure out what PoS is.
What is PoS mining
PoS mining is an option to make money on the blockchain that allows you to process cryptographic information without using expensive equipment. This algorithm allows you to remove the worries of monitoring equipment – the investor needs to:
- Successfully choose and purchase an altcoin;
- Install a local node and keep it up and running 24/7;
- Do not withdraw assets from this address.
After that, it remains to receive the proceeds.
Method PoS mining has existed since 2011 and was first implemented in the PPCoin coin, which transformed into PeerCoin.
Initially, the technology was an auxiliary tool for the PoW system. The POS algorithm became widely known after Vitalik Buterin became interested in it. The decline in the profitability of traditional mining and a long stagnation in the market forced investors to pay closer attention to this method of capital growth. The concept was gradually expanded and improved, reaching the current position of an independent approach to work.
How it works, features of the algorithm
The principle of operation is based on the accumulation of coins of a given type. The calculation of the profitability of cryptocurrencies was established by the developers of the project, there are coins c Hybrid method of work where integrated PoS and PoW mining at the same time. In many ways, the principle is similar to a deposit account, which receives interest as a reward for using the bank’s services.
The advantage of the pos mining algorithm is a high degree of security. The organizational structure makes an attack on a PoS-based system unprofitable. In some cases, a criminal who wants to attack a coin is among the victims, because the cryptocurrency loses its stability and value.
However, young projects with a relatively low capitalization are in the high-risk group, regardless of the protection algorithm. Taking control of some of the trusted nodes of a young blockchain startup is no more difficult than renting computing equipment for a 51% attack.
In addition, virtual tokens are prone to inflation. The developers are trying to solve this problem by setting a flat fee on the processing of transfers.
A negative point when working with PoS coins is a fairly high entry threshold. In some cryptocurrencies, it can be measured in hundreds of thousands of dollars.
To assess the profitability of working with such projects, there is a special calculator for pos mining. With its help, you can always estimate the possible costs and potential returns on investments.
The main differences between PoS and PoW
The abbreviation PoS stands for “proof of ownership”, that is, a person with a certain amount on the balance sheet is allowed to take part in the creation of blocks. POW it is a “proof of work”, and here the maintenance of the network is in the hands of the owners of the computing equipment. They may not keep a penny in the account.
Algorithms are constantly being compared because they are at the heart of the modern cryptocurrency market. When analyzed in detail, PoS has several obvious and useful advantages:
- Increased speed of validation.
- Reduced costs of organizing protective functions.
- Reduced commission fees.
PoW, in turn, is characterized by high resistance to various kinds of attacks. The downside of proof of stake mining is some risk of forming a centralized system due to the fact that all users strive to collect the largest number of assets in their hands to obtain maximum income.
After devices for industrial mining entered the market, other cryptocurrencies are not insured against falling under the control of financial groups.
The way pos mining works attracts users and experts. The system looks more economically attractive and more rational. At the same time, the PoW algorithm looks more profitable for working with large blockchains. Therefore, everyone worries when the ether will switch to pos mining – this rumor arose about three years ago and continues to be discussed in the industry.
Vitalik Buterin had previously stated that he did not need miners, but he was unable to implement the idea of a complete transition to proof of ownership. So far, the level of reliability of this approach is insufficient, which leads to increased risks for the most expensive projects.
How to start mining
To start, you should first study the project, namely the technical part of the emission component – this will reduce costs and prevent wasteful investments. Convenient to look at the forum Bitcointalkwhere all projects have their branches.
First of all, you should create your own local wallet on your computer. – your assets will be stored here and you will be able to manage your own funds. Storing funds on the exchange will not bring profit, since a dedicated IP is required for synchronization.
Most of the best pos mining coins are in the top 100 Coinmarketcap list.
If you decide to work on your own, then the concise procedure is as follows:
- Buy coins on the exchange;
- Download the wallet to your computer;
- Synchronize the wallet, which takes a day;
- Send funds to a local wallet (PC);
- Keeping coins in your account and receiving proportional rewards.
What you need for mining, the choice of components
PoC mining is possible on a stationary PC that has an Internet connection and not an old operating system Windows 10… By its structure, it is divided into several options and varieties:
- Self-mining using your own computer.
- Renting a cloud computer (Dedicated Server) and stopping a wallet on it.
- Pool mining. Working through miner services using cloud technologies. In general, with this approach, a group of specialists combines their assets to increase earnings, after which they divide the received profit proportionally.
Installing a Linux distribution for mining will require basic knowledge of the terminal system.
Recommended components for PoS mining:
- Motherboard – ASUS H110M-D, LGA 1151, Intel H110, mATX
- CPU – INTEL Celeron G3900, LGA 1151, 2-core
- RAM — CRUCIAL CT4G4DFS824A, 2400, DDR4 — 4Гб
- HDD — WD Green WDS120G2G0A 60Гб, 2.5″, SATA III
- Power Supply — ACCORD ACC-350W-12, 350Вт, 120мм
- Operating system — Windows 10 Home Rus 64bit
After each transfer of funds, the volume of information increases, so it is better to take the drive with a margin, so that after a year, or even after a few months, you do not have to change it to a larger one.
Mining software
For efficient work, it is enough to use a standard wallet. Always download the original versions and do not rush to download the first project Wallet that comes across to you. All original social networks, sites and resources are posted on the site Coinmarketcap… By clicking on the link Announcement you will find the current Wallet for setting up your wallet.
Which coins for PoS mining are better to choose?
The best coins for pos mining are regularly announced by experts who publish relevant reviews. To decide which coins for pos mining to choose, we recommend that you study the following list.
| № | Coin name | Date of creation and number of exchanges | Website |
|---|---|---|---|
| 1 | Peercoin | Traded on 15 exchanges, date of creation 2012 | https://peercoin.net/ |
| 2 | Decred | Traded on 35 exchanges, date of creation 2015 | https://www.decred.org/ |
| 3 | BlackCoin | Traded on 5 exchanges, date of creation 2014 | https://blackcoin.org/ |
| 4 | Novacoin | The site has a PoS calculator. Traded on 2 exchanges, date of creation 2013 | http://novacoin.org/ |
| 5 | Cardano | Closed private PoS mining. Traded on 85 exchanges, date of creation 2015 | https://www.cardano.org |
| 6 | EOS | Traded on 250 exchanges, date of creation 2017 | https://eos.io/ |
| 7 | LEOcoin | Traded on 1 exchanges, date of creation 2016 | http://www.leocoin.org/ |
| 8 | layers | Traded on 20 exchanges, date of creation 2016 | https://stratisplatform.com/ |
| 9 | Lisk | Traded on 45 exchanges, date of creation 2015 | https://lisk.io/ |
| 10 | Diamond | Traded on 2 exchanges, date of creation 2014 | https://bit.diamonds/ |
| 11 | ICON | Traded on 45 exchanges, date of creation 2014 | https://www.icon.foundation/ |
| 12 | SolarCoin | Traded on 3 exchanges, date of creation 2014 | https://solarcoin.org/ |
| 13 | EmerCoin | Traded on 5 exchanges, date of creation 2013 | https://emercoin.com/ru |
| 14 | Reddcoin | Traded on 10 exchanges, date of creation 2014 | http://www.reddcoin.com/ |
| 15 | PIVX | Traded on 17 exchanges, Fork was made in 2016 | https://pivx.org/ru/home-ru/ |
The rating of pos mining cryptocurrency is regularly updated and expanded, so if you work in this niche, do not stop following the market news. The current list of coins for pos mining may contain a large number of cryptocurrencies with different profitability and profitability.
Co-mining pools: how they work
Communities of miners pooling their assets for increased profits. Through the use of cloud services and capabilities, the technology allows you to form additional insurance for users and additional protection in the event of bankruptcy.
The general principle is as follows: you invest your assets in a single community wallet. Based on the collected volume, rewards are credited to the account, which are then distributed among all participants strictly in accordance with the amount of investment at the initial stage.
We do not recommend using such services, as there is a high probability of deception. After the transfer, the funds often end up in the hands of cybercriminals and you will never see them again.
Conclusion
The progressive development of the system and algorithm leads to its spread, the transition of coins from one format to another. Experts agree that this technology will remain among the leaders for a long time. The investment is more than justified, especially considering the factual passive income.
Before crypto winter, PoS projects were in the shadows. But, in 2020, EOS, Tezos and Cardano entered the top twenty of the coinmarketcap rating. This method of earning digital assets is gaining popularity, especially its type of staking. You simply freeze funds for a certain period and receive interest. To attract customers, staking began to actively implement trading platforms.
For the onset of the era of PoS mining, a more extensive introduction of cryptocurrency into the global financial system is required. In addition, Bitcoin remains the main digital asset, and his team is not going to change the consensus algorithm. But if you keep alternative coins until better times, then why not earn extra money with them. Just be careful, beware of scammers.
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