Proof of stake

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Proof of stake is a consensus algorithm similar to proof of work. A blockchain that uses the proof of stake algorithm does not rely on "traditional" mining to validate transactions and determine who gets to add a new block to the blockchain - at least, not in the same way as bitcoin and other digital currencies using the proof of work model.[1] Instead, the network assigns specific users to serve as "validators" - users who create blocks and validate changes made to the blockchain based on how much of the network's cryptocurrency they hold.

Ethereum creator Vitalik Buterin described this theoretical model in detail on his website.[2] The idea is that the more of a network's cryptocurrency you have, the higher your stake in that system. The higher your stake, the more likely you are to be chosen by the system to create a new block. Another key difference is that, rather than "discovering" cryptocurrency tokens in a blockchain, all the tokens already exist - they are simply parsed out over time by the network.[3]

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