PoS mining technology - which coins to mine and how to start

general characteristics

PoW and PoS are types of algorithms with which the blockchain determines how the problem of distributed consensus will be solved. Ultimately, this determines how the block reward will be distributed.

In PoW (from English proof of work - proof of work) - the likelihood of successfully solving a cryptographic puzzle, on which the creation of a new block depends, is greater for owners of more powerful computing equipment.

In PoS (from the English proof of stake, literally: “proof of share”), the creator of the next block is determined pseudo-randomly, and the probability that he will be chosen as the creator of the block depends on his wealth, or, in other words, the size of his wallet.

PoW is used in cryptocurrencies:

• on the SHA256 algorithm: Bitcoin, Bitcoin Cash, Mazacoin, Namecoin;
• on the Scrypt algorithm: Auroracoin, Coinye, Dogecoin, Litecoin;
• based on the CryptoNote algorithm: Bytecoin, Monero, DarkNote.

PoS is used in cryptocurrencies:

• on the SHA256 algorithm: Nxt (NXT);
• on the Scrypt algorithm: Gridcoin; BlackCoin.

Currencies with mixed types of algorithms (PoW and PoS):

• Peercoin;
• Emercoin;
• BitConnect.

In 2020, Vitalik Buterin’s Ethereum announced the transition from PoW to PoS. The final transition of ether to PoS should take place in 2018.

POS materials perform many functions

• Attracts the attention of store visitors to a specific product
• Inform the buyer about all the advantages of this product
• Contribute to making a purchase “here and now”
• Help the buyer navigate the store, for example, signs and signs perform a navigation function
• With the help of pictorial materials, you can highlight areas in the store, thereby highlighting a product or an entire brand as much as possible.
• And many other features that influence the increase in demand

Features of PoW

PoW consensus (also called Nakomoto consensus) was the most innovative solution proposed in Satoshi’s article “Electronic Cash”. PoW solves many electronic money problems, such as Sybil attacks. In addition, PoW ensures fairness in the network: the success of a miner is proportional to the computing power of his equipment (hashrate). If a miner's hashrate is 1% of the entire network, then it is most likely that he will create 1% of the blocks and receive 1% of the reward. This is why Bitcoin appeared on the basis of PoW.

However, for all its coolness, PoW has its drawbacks. Some people consider them significant:

1. Lack of utility: Computations performed for proof of work serve no useful purpose (other than to provide security). Solving cryptographic problems occurs for the sake of solving them. At the same time, in order to make calculations, you need to spend resources, primarily electricity. It turns out that the resources spent on mining in PoW are wasted;
2. The problem of maintaining decentralization. About 80% of Bitcoin's hashrate is now located in China. Centralization, in theory, could help miners unite and conduct malicious activities. If such miners become the majority (the so-called 51% attack), they will be able to ignore blocks of other miners, distributing the reward only among themselves, or double-spend the same crypto coins.

Differences between PoS mining

In 2011, an alternative proof technology was proposed - proof of stake or proof of share. It differs from proof of work in that instead of performing computational operations, the block creator shows that he has a stake in the system (in the form of crypto in his wallet). Thus, the more digital currency a miner has, the higher his chance of being rewarded for a new block.

PoS is, first of all, a method, an algorithm, a proof that ensures the protection of the system. At the same time, users saw in this method of solving distributed consensus something that was not initially a basic characteristic of the algorithm - an investment opportunity. Thus, POS mining is also another way to make money on cryptocurrency. The main feature of this method is that you don’t need to invest anything (or almost nothing).

Unlike regular mining or cloud mining, you do not need computing power. Here you buy a cryptocurrency that mines you a new cryptocurrency just because you already have that cryptocurrency in your wallet. It seems like some kind of fantasy or even some kind of simple scam. But no. This condition is built into the PoS algorithm itself and is an integral part of it.

For the PoS blockchain to function, all that is needed is constantly running wallets on the miners’ computers. The longer you keep your coins, the more you earn.

Why is PoS considered secure from 51% attack?

• First, to gain control of the network, a miner must own a larger share of the network's cryptocurrency. Such an attack can be extremely expensive, because... it requires an investment of more than half of the total money supply of the entire cryptocurrency network.
• Secondly, by carrying out such an attack on the network, the attacker will become the biggest victim, since he will steal the reward from himself.

Stages and strategies of POS production

How to start mining PoS currency:

1. Select the PoS currency (below is a description of some currencies) that you will mine.
2. Create a crypto wallet.
3. Buy currency.
4. Wait until blocks appear in the feed (the process will take about 24 hours).
5. Install the software client on your computer.
6. Activate wallet.

There are several POS mining strategies.

The simplest is to purchase some kind of PoS currency (hybrid PoW-PoS currencies are also suitable, for example, PutinCoin), which is listed on at least one of the major exchanges. You start mining it, extracting new blocks and receiving a reward for them, your earnings will consist of two components:

• change in the price of a currency based on the results of trading on the exchange.
• reward for blocks in the form of cryptocurrency, which you can also sell on the exchange.

A slightly more complex strategy in terms of time investment is buying a new cryptocurrency that is not yet listed on the exchange. The goal is to purchase the maximum amount of currency at the minimum price in order to sell it when it appears on the exchange. This method has a significant drawback - the currency may never begin to be traded anywhere. However, you risk almost nothing, so you can try your luck. Crypts of new generations appear on the network every now and then, giving hope with their technological effectiveness.

Some craftsmen mine PoS currency collected from faucets. This method also has a right to exist, however, the profitability of such mining is relatively low.

Where to begin

If you are interested in PoS technology, then the first thing you need to do is choose a coin that can be mined in this way. Then move step by step:

1. Create a wallet (usually a native one, but sometimes the system can support partner wallets);
2. Buy coins in the required quantity;
3. Wait for the blocks to appear (usually takes up to 24 hours);
4. Install the software client on your PC;
5. Activate your wallet.

PoS is a mechanism that will allow you to increase your capital. The profit will not be big, but you won’t have to spend money on buying expensive equipment and consuming electricity either. The system will not be as loaded as with PoW mining.

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Cloud PoS mining

We should also talk about the cloud mining method using PIC technology.

The most striking service for cloud POS mining is offered by PosWallet. You can start mining immediately after registering and replenishing your balance. Moreover, the service allows you to receive crypto for free and use it for mining using the PoS protocol (section called Faucet). PosWallet pool gives you the opportunity to get money around the clock. You don't even have to be online. Money is withdrawn automatically. The pool takes a commission of 1%.

Unfortunately, as of September 25, 2020, the pool does not register new users. Let's hope this is temporary.

Cryptocurrencies and profitability of PoS mining

The profitability of mining PoS currencies in 2020 depends on the declared reward of the cryptocurrency itself. This information can usually be found on the coin's website. Below we will talk about the most popular coins for POS mining that are relevant today and what the profitability is.

For the first time, a cryptocurrency with a new mining concept was announced in September 2013. The new type of digital money is called NXT. Today, other cryptocurrencies are already being heard, with their own chips and percentage of profitability. More details about each.

LEOcoin (https://www.leocoin.org):

• Claims an annual rate of 20% for the maximum investment in crypto (more than 50,000 coins).
• Traded on at least 5 exchanges.
• Capitalization $24,373,792 (as of September 25, 2017).
• Russian language on the site.

ReddCoin (https://www.reddcoin.com):

• The stated yield is 5% per annum.
• Traded on 8 exchanges, incl. on such a large one as Bittrex.com.
• Capitalization $40,698,653 (as of September 25, 2017).

ClubCoin (https://clubcoin.co):

• The stated yield is 20% per annum.
• Traded on 2 exchanges, incl. at Bittrex.com.
• Capitalization $43,108,009 (as of September 25, 2017).

NovaCoin (https://novacoin.org):

• Fantastic stated return of 100% per annum.
• Traded on 8 exchanges.
• Capitalization $8,664,226 (as of September 25, 2017).

Which currencies cannot be mined using the PoS algorithm:

• Bitcoin (uses PoW algorithm);
• Ethereum (uses PoW algorithm).
• Litecoin (uses PoW algorithm);
• NEM (uses the POI - proof-of-importance algorithm);
• Decred (uses both algorithms, but mining is carried out exclusively by PoW).

Cryptocurrencies that support pos mining

At the moment, we provide a list of coins that are profitable and available for pos-mining . Which ones are profitable to buy and how much they cost, you can always look at coinmarketcap.com, just go to the site and enter the name of the desired coin in the search field, and you can buy them on one of the cryptocurrency exchange exchanges.

Also, by going to the details of the coin, you can see its changes in price for the entire period, go to the website and see the development plan. On the “markets” tab you can find out on which exchanges this coin is traded.

• LEOcoin (LEO) – yield of 20% per annum with a maximum investment of 50,000 coins, traded on 5 exchanges
• ReddCoin (RDD) – yield 5% per annum, traded on 8 exchanges
• ClubCoin (CLUB) – yield 20% per annum, traded on 2 exchanges
• NovaCoin (NVC) – 100% annual yield, traded on 8 exchanges
• BlackCoin (BLK/BC) – fixed remuneration for participation in equity financing 1.5 BLK + commissions depending on the time of participation, traded on 2 exchanges
• Diamond (DMD) – yield of 25% per annum (then it will decrease), traded on 2 exchanges
• CoinMagi (XMG) – yield 5% per annum, traded on 2 exchanges
• Mintcoin (MINT) – yield 10% per annum (descending), traded on 5 exchanges
• OKCash (OK) – yield 20% per annum (decreasing), traded on 8 exchanges
• HyperStake (HYP) – yield 750% per annum, traded on 4 exchanges
• Hyper (HYPER) – yield 5% per annum, traded on 2 exchanges
• Quotient (XQN) – yield up to 1600% per annum, traded only on YoBit
• ZeitCoin (ZEIT) – yield 15% (descending), traded on 7 exchanges