Do You Stake?

Proof-of-stake, also referred to as "staking" is a blockchain consensus protocol that I believe is not getting proper attention. While much of the crypto world is discussing the latest in crypto mining hardware, stakers are quietly earning interest on their holdings, without spending a dime on expensive ASICs or electricty.

Every cryptocurrency has a number of essential properties, such as price (pegged to USD or BTC), issuance rate, total supply, total amount in curculation and trading volume, among others. When describing a crypto coin to a non-technical person or someone more interested in the economic aspect, it does make sense not to specify what the consensus protocol is - proof-of-work (PoW) or proof-of-stake (PoS).

Truth is, there are a number of other consensus protocols but they are either a combination between PoW and PoS or are not popular enough to consider. Now, let us examine the basic differences between the major blockchain consensus methods:

	Proof-of-Work	Proof-of-Stake
coin allocation	to "miners" who solve a cryptographic puzzle	percentage allocation to those having a set minimum of coins
reward	per block + transaction fees	transaction fees only
hardware cost	considerable + ongoing expenses (electricity and wear)	minimial, not always required
functions	SHA256, Scrypt, Blake-256, CryptoNight	none as such, there is a definition of interest rate
notable coins	BTC, BCH, NMC	NAV, NEO, POS (PoSToken)

To me, the most notable examples from both categories are Bitcoin (BTC) and Neo (NEO). There is a new kid on the block, also - POS token. It is worth noting that POS is an Ethereum-based token, which means that a smart contract governs the staking logic. On the other hand, NEO for example, has its own blockchain.

By no means, this comparison is exhaustive enough. In future articles I plan to go into more detail about what is worth staking. My goal was to inform people that interest rates have a huge competitor in the face of Proof-of-Stake coins. So it is not a surprise that there is a growing percentage of investors whose portfolio is predominantly comprised of different cryptocurrencies.

P.S.: an excellent list of POS coins