Top 6 Cryptocurrencies That Use Proof-Of-Stake Protocol
by Arnab Dey Finance 29 August 2022
The cryptocurrency market has gained popularity lately, as more than 19,000 cryptocurrencies exist at the moment ―and more are to come. But mining for coins requires computation power, and with time, it becomes more difficult to gain crypto coins, which is why blockchains are developing and looking for better ways to mine.
If you’re wondering why there are so many cryptocurrencies, know that’s because innovative developers found better technologies and practices to help investors.
For example, because at some point you won’t be able to mine Bitcoin anymore (due to the limited supply), there comes Ethereum with unlimited coins and more features in the blockchain. So, each coin has its purpose, but let’s find out which ones have changed their protocol.
PoS versus PoW
Proof-of-Work (PoW) is the first system used to verify and track new cryptocurrencies and transactions on the blockchain. To win the right to mine a block of crypto, you have to solve a complex math problem (work), while finding the solution is the proof. But you’re not doing all this process by yourself; instead, your computer will solve such puzzles to verify transactions.
PoW is advantageous because it is secure and widely used by most popular cryptocurrencies. But, as technology evolves, it requires expensive hardware, uses high levels of electricity, and is pretty difficult to use for individual miners. That’s why a new system, Proof-of-Stake, is here to make big changes.
PoS, on the other hand, works in different ways. With this method, a computer algorithm chooses validators to verify blocks. It uses less energy, can handle more transactions, and can scale more easily than PoW networks.
Why Is PoS better?
Lately, hackers have taken advantage of the PoW model as it has become more vulnerable. This is why bigger cryptocurrencies, like Ethereum, have decided to switch from PoW to PoS because it provides better security and a more transparent ecosystem.
Ethereum is among the decentralized platforms that have gained popularity through its constantly evolving blockchain, allowing users to make smart contracts, NFTs, and DeFi applications easier to use and build.
If you’re curious about the ETH price chart, which is Ethereum’s native currency, know that the fluctuations are given by the media coverage, demand and supply, and many other factors (that apply to any cryptocurrency).
Going back to why PoS is better, know that with this protocol, a new block’s validity depends on the size of the stake, while with PoW, the mining depends on the computational work done, which makes the mining process more difficult. And regarding scalability, PoS doesn’t require involving the entire network to verify each transaction, but PoW does.
Cryptocurrencies That Use PoS
Even if PoW is still leading, some cryptocurrencies decided to change their verifying system to PoS. Of course, this top doesn’t include all of them which use this protocol or the ones that plan to do it but are the most popular now, and we’re going to see what makes them special.
1. Cosmos (ATOM)
This coin provides services to the Interchain, which is an extended network of interconnected blockchains. Its mission is combining chains by creating IBC connections and operating decentralized blockchains like Ethereum and Bitcoin. By working through a PoS system, it has a lower carbon footprint, with low and fast transactions. The ecosystem of Cosmos has various apps, services, and tools to allow users to use the blockchain as they like.
2. Cardano (ADA)
This decentralized PoS blockchain launched in 2017 runs on an Ouroboros consensus protocol designed to reduce energy expenditure. It recently allowed users to create smart contracts, and non-fungible tokens and manage assets. But it cannot be mined as a usual cryptocurrency. You must purchase it on a cryptocurrency exchange so you can use it afterward.
3. Polkadot (DOT)
The Polkadot network enables cross-blockchain transfers and any type of data or asset. It provides a common set of validators to secure multiple blockchains, as it’s user-driven governance where all stakeholders have a voice.
The Web3 Foundation founded it, and it used an NPoS model (nominated proof-of-stake for a low carbon footprint, being among the leading green cryptocurrencies out there).
4. Solana (SOL)
This decentralized blockchain is built to enable various apps using the PoS protocol. It provides composability between ecosystem projects and maintains a unique global state.
Users are encouraged to become validators and secure the network by running decentralized infrastructure, and, like most cryptocurrencies using PoS, it relies on developers’ and investors’ contributions.
Solana is the place where you can discover DeFi projects, lending protocols, NFT marketplaces, Web3 apps, and DEX (decentralized exchange) applications. It is also known for the game Break Solana, where users are encouraged to see how fast it is by sending as many transactions as possible in 15 seconds.
5. VeChain (VET)
VeChain cryptocurrency provides a space for meta-transactions with multi-party payments, multi-task transactions, and a controllable transaction lifecycle.
It is continuously evolving with the help of academic research partners, enterprise users, blockchain developers, and community contributors. It has a unique two-token system that helps separate the cost of using blockchain from market speculation.
VeChain is controlled through the built-in smart contract so that you can avoid hard forks. You can have smart contract execution transactions and financial and business activities done fast and securely. It also has institutional partners to create additional co-investment opportunities in standalone blockchain projects.
6. Tezos (XTZ)
Similar to Polkadot, Tezos wants to build the path to the Web3 revolution. Users can interface with each other over the decentralized network, exchange value, and use applications without other third parties involved. By using a PoS protocol, Tezos is:
- Energy-efficient
- Scalable, through the state-of-art, which is the highest level of development achieved by it;
- Upgradable, as it adds features through its on-chain upgrade mechanism;
- Run by users that can participate, evaluate and propose amendments;
Final thoughts
Cryptocurrencies constantly evolve to give users better performance and chances to develop their portfolios. By understanding what’s best for people, some of them have implemented the Proof of Stake model to their blockchains (or are in the process of) to make mining easier and safer than before.
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